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Stocks of information technology companies are seen up next week due to better-than-expected Oct-Dec results and a depreciating rupee. Over the last 10 trading sessions, the CNX IT has been outperforming helped by positive news such as robust Oct-Dec results and a falling rupee. The rupee has fallen 0.9% against the dollar since Jan 1. Yesterday the rupee closed at 54.9100 against Thursday's close of 54.3600. Further, with the Union Budget 2013-14, throwing up no major surprises, IT stocks remained stable. The negative impact from direct taxes and DDT (dividend distribution tax) viewpoint is slightly negated by encouraging foreign companies to repatriate dividend into the country. However, Finance Minister P. Chidambaram has increased tax surcharge on companies with profits over 100 mln rupees to 10% from 5% earlier. He also increased the tax surcharge on dividend distribution tax from 5% to 10%.
This corporate tax surcharge is likely to have an impact on companies' profitability by 1.0-1.6%. In the next five sessions, CNX-IT index will see support at 7025, and face strong resistance at 7200. Infosys, which mirrors the CNX IT Index, will find support at 2,867 rupees and face resistance at 3,000 rupees. Support for Tata Consultancy Services, which touched all-time highs over the last two weeks, is pegged at 1,450 rupees. For HCL Technologies, which also touched its all-time high, support is pegged at 710 rupees, while resistance is seen at 737 rupees. Wipro, on the other hand, may find support at 410 rupees and face resistance at 426 rupees.
Stocks of information technology companies are seen up next week due to better-than-expected Oct-Dec results and a depreciating rupee. Over the last 10 trading sessions, the CNX IT has been outperforming helped by positive news such as robust Oct-Dec results and a falling rupee. The rupee has fallen 0.9% against the dollar since Jan 1. Yesterday the rupee closed at 54.9100 against Thursday's close of 54.3600. Further, with the Union Budget 2013-14, throwing up no major surprises, IT stocks remained stable. The negative impact from direct taxes and DDT (dividend distribution tax) viewpoint is slightly negated by encouraging foreign companies to repatriate dividend into the country. However, Finance Minister P. Chidambaram has increased tax surcharge on companies with profits over 100 mln rupees to 10% from 5% earlier. He also increased the tax surcharge on dividend distribution tax from 5% to 10%.
This corporate tax surcharge is likely to have an impact on companies' profitability by 1.0-1.6%. In the next five sessions, CNX-IT index will see support at 7025, and face strong resistance at 7200. Infosys, which mirrors the CNX IT Index, will find support at 2,867 rupees and face resistance at 3,000 rupees. Support for Tata Consultancy Services, which touched all-time highs over the last two weeks, is pegged at 1,450 rupees. For HCL Technologies, which also touched its all-time high, support is pegged at 710 rupees, while resistance is seen at 737 rupees. Wipro, on the other hand, may find support at 410 rupees and face resistance at 426 rupees.
