I.T Stocks
Outlook for the week – 11 to 14.08.2014
( www.rupeedesk.in )
Stocks of information technology
stocks are likely to take cues from macroeconomic
factors. As all significant
events impacting the market such as financial results are over,
IT stocks are not expected to
show any sector-specific trend but move with the broader
market.
Investors will continue to
closely track the rupee as currency movement is crucial for IT
companies. IT companies bill
majority of their revenues in dollars and consequently they
earn more if the Indian currency
falls against the dollar. Typically, for every 1% change
in the INR/USD equation, margins
of tier 1 Indian IT companies are impacted by 25-35
basis points.
The rupee touched an over
five-month low against the dollar earlier today as global
tensions mounted after US
President Barack Obama authorised air strikes in Iraq, and as
tensions between Ukraine and
Russia showed no signs of easing. The rupee closed the
week at 61.14 per dollar.
Global markets closed in the
negative for the week on the back of geopolitical tensions.
The US authorising targeted air
strikes on Iraq was the latest trigger. There was growing
unease over the crisis in
Ukraine.
Indian markets were not insulated
from the selloff in global markets as it signed off the
week in the negative zone...
Going ahead, geopolitical tensions would continue to be in
limelight, we believe. Investors
are advised to utilise the opportunity to buy into quality
stocks with strong management
pedigree.
Among IT stocks, Infosys was the
biggest gainer over the week. Infosys stocks ended up
4.23% yesterday from last
Friday's close, on optimism around Vishal Sikka who came on
board as the chief executive
officer and managing director on August 1. Investors are
expecting a turnaround from Sikka
and Infosys stocks are likely to be trading in the
positive zone next week. Any
commentary by Sikka on the company's plans and outlook will be closely watched upon by
the market.
