July may be a turnaround month for Nifty IT index; heres why!

Hence, don’t be surprised if you see Nifty IT index roaring like a lion

Once a darling of investors but now an evil, it’s the saga of Nifty IT sector, which lost nearly 25 per cent in the last Q2 of the calendar year 2022. Moreover, on a YTD basis, it shed as much as 28 per cent.   

Post the outbreak of the Coronavirus pandemic, many things changed including the way people communicated and transacted as there was a massive shift to online platforms. Since then, Nifty IT sector picked paced and has delivered astronomical returns! This music is going on for almost 20 months or so with some mild hiccups in between.  

However, the tide started to change its course at the beginning of CY2022.   

Nifty IT index lost almost 10 per cent in the month of January and thereafter, it turned volatile while Q2CY22 was a nightmare for Nifty index.   

However, as the saying goes, every dark cloud has a silver lining; if we go by the history of July, it shows that Nifty IT index could be in for a turnaround. Why are we saying so? 

As per the seasonality study, July is among the top-performing month for Nifty IT index historically. On average, the sector has delivered gains of 4.2 per cent, considering its performance from the year 2004. Moreover, in the past five years, the index has declined only once i.e., in the year 2019 by merely 2 per cent; otherwise every year in the month of July, the index has come out with flying colours.   

Let’s deep dive a bit further; the two heavyweights of Nifty IT index are TCS and Infosys. Interestingly, TCS has delivered an average gain of 4.7 per cent in the month of July while Infosys is also not too far behind as its performance stands at 4.5 per cent.  

Hence, don’t be surprised if you see Nifty IT index roaring like a lion in the month of July.