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Information technology stocks will likely take cues next week from a possible correction in the broader market due to macro economic data. The next important trigger would be the fiscal deficit data and GDP numbers as we will see investors reacting to the numbers on Monday.
Post market, the government yesterday said India's Oct-Dec gross domestic product expanded by 4.7%, slightly below the average of estimate of 4.9%, indicating the possibility of a correction.
The market was on an upswing in the second half of February and many traders are sitting on gains. However, IT stocks could serve as a safe haven, but if the correction is heavy, they will also be pulled down. The market has been able to hold onto gains for the last two weeks, with the Nifty up 3.25% in the second half of February, making a correction a stronger possibility.
However, giving support to the market was US Federal Reserve Chair Janet Yellen's testimony before a US Senate Committee on Thursday, in which she noted a softening of US data in the second half of February. Yellen indicated that the Federal Reserve would be open to slowing down the tapering of its bond buying programme if the softening data turned out to be caused by long-term factors, and not just cold weather.
A slowdown in the US recovery would boost domestic market oriented stocks in India, while dampening sentiment around the IT sector, which gets most of its revenue from the US market. Interest rate action by the European Central Bank after its policy meeting on Thursday would also impact global stock markets, including India's.
Mid-cap IT stocks such as Persistent Systems and Hexaware Technologies, which were in a 'catch up rally' last week, gave up some of the gains on Friday. However, Geometric has risen 28% in the last five sessions.
Information technology stocks will likely take cues next week from a possible correction in the broader market due to macro economic data. The next important trigger would be the fiscal deficit data and GDP numbers as we will see investors reacting to the numbers on Monday.
Post market, the government yesterday said India's Oct-Dec gross domestic product expanded by 4.7%, slightly below the average of estimate of 4.9%, indicating the possibility of a correction.
The market was on an upswing in the second half of February and many traders are sitting on gains. However, IT stocks could serve as a safe haven, but if the correction is heavy, they will also be pulled down. The market has been able to hold onto gains for the last two weeks, with the Nifty up 3.25% in the second half of February, making a correction a stronger possibility.
However, giving support to the market was US Federal Reserve Chair Janet Yellen's testimony before a US Senate Committee on Thursday, in which she noted a softening of US data in the second half of February. Yellen indicated that the Federal Reserve would be open to slowing down the tapering of its bond buying programme if the softening data turned out to be caused by long-term factors, and not just cold weather.
A slowdown in the US recovery would boost domestic market oriented stocks in India, while dampening sentiment around the IT sector, which gets most of its revenue from the US market. Interest rate action by the European Central Bank after its policy meeting on Thursday would also impact global stock markets, including India's.
Mid-cap IT stocks such as Persistent Systems and Hexaware Technologies, which were in a 'catch up rally' last week, gave up some of the gains on Friday. However, Geometric has risen 28% in the last five sessions.
