Zensar Technologies, Newgen Software shares jump up to 16% amid upbeat IT sentiment; what's driving the surge?

Shares of Zensar Technologies Ltd and Newgen Software Technologies Ltd surged in Friday's trade, tracking a sharp rebound in IT stocks as the Nifty IT index climbed nearly 2 per cent after the June quarter (Q1 FY27) earnings season got off to a positive start, boosting sentiment across the sector.

Zensar Technologies jumped 15.53 per cent to hit a day high of Rs 516.30, while Newgen Software rallied 14.91 per cent to Rs 542.95.

At last check, Zensar was trading 13.70 per cent higher at Rs 508.70, though the stock was still down 27.45 per cent year-to-date (YTD). Newgen Software was trading 11.02 per cent higher at Rs 524.55, but remained 37.19 per cent lower YTD.

Here's what market participants said about the upmove and the road ahead for these two IT counters:

For Zensar Technologies, Ravi Singh, Chief Research Officer at Master Capital Services, noted that the stock attracted strong buying interest as sentiment towards the IT sector improved.

"The sharp rise in volumes suggests that fresh institutional buying has also supported the move," he said.

Singh added that the stock has crossed a key technical resistance level, triggering fresh buying as well as short covering.

"While today's rally has strengthened the near-term outlook, the sustainability of this move will largely depend on the company's upcoming quarterly results and management's outlook on business growth. If earnings remain healthy and demand continues to improve, the stock could maintain its positive momentum in the coming sessions," he also stated.

AR Ramachandran, Sebi-registered research analyst at Tips2trades, said, "The stock price is bullish on daily charts with strong support at Rs 453. A daily close above the resistance of Rs 516 could lead to an upside target of Rs 583 in the near term."

On Newgen Software, Singh said the stock witnessed a strong breakout after spending several weeks in a narrow trading range.

"The sharp jump, supported by higher-than-usual trading volumes, indicates fresh buying interest and improving market sentiment," he added.

According to Singh, the stock has moved above a key resistance zone, while momentum indicators have turned positive, indicating the rally could extend if it sustains above the breakout level.

"Recent business developments and a healthy order pipeline have further boosted investor confidence. Going ahead, the company's upcoming quarterly results will be the key trigger. Sustaining above Rs 500 may keep the positive bias intact, while Rs 540-550 remains the next area to watch," he added.

Ramachandran said, "Newgen's stock price is bullish on daily charts with strong support at Rs 477. A daily close above the resistance of Rs 543 could lead to an upside target of Rs 614 in the near term."

Meanwhile, IT bellwether Tata Consultancy Services Ltd (TCS) reported a 4.62 per cent year-on-year (YoY) increase in consolidated net profit for the June quarter (Q1 FY27). Profit rose to Rs 13,349 crore from Rs 12,760 crore in the corresponding quarter last year, while revenue from operations grew 13.93 per cent YoY to Rs 72,275 crore from Rs 63,437 crore.