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Stocks of information technology companies are seen bullish next week on strong data releases in the US, but we expressed caution and some consolidation is likely. Indian information technology companies derive around 50% of their revenue from the US. The CNX IT index has risen for the last 10 sessions, and is near its lifetime high of 7592. Due to this, some consolidation is likely. On Mar 1, data from the US Commerce Department showed consumer spending rose 0.2% in February. Institute for Supply Management's factory data also brought cheer amid concerns over the $85 bln spending cuts that came into effect Mar 1, with the index advancing to 54.2 in February from 53.1 in January. A lower-than- expected 2% fall in US factory orders in January also aided sentiment. On the home front the information technology sector may see positive demand uptick in 2013. Also, the unanimous view of managements of various companies that the next financial year would be better than the current year is seen helping IT stocks next week. While research firm Gartner's forecast that the global IT services spend in 2013 will grow over 5% as against the 2% growth in 2012 is seen as a positive sign for the industry, reduced concerns over growth in the European market and financial services sector are also likely to provide relief.
