IT Stocks Outlook for the week - 23 to 27.03.2015
( www.rupeedesk.in )
Stocks
of information technology companies are expected to remain range bound next
week as investors will await Jan-Mar results. Last week saw a reversal of sorts
with large-cap stocks-- Tata Consultancy Services Ltd and Infosys
Ltd--reporting net gains while smaller players such as HCL Technologies Ltd and
Tech Mahindra Ltd witnessed decline of around 3%. Wipro was the biggest gainer
this week with a 2.1% rise. IT stocks had seen corrections earlier this week
after a spate of downward revisions in outlook for the fourth quarter of the
current financial year ending March.
Though
companies largely blamed the strong dollar for revising downward their
expectations for Jan-Mar, a few of them were also hit by client-specific
issues, leading to some doubts on the sector as a whole.
TCS
indicated a soft quarter, while Mindtree and Persistent Systems guided down.
KPIT
Technologies
said it expected a muted quarter. The current quarter weakness includes a mix
of seasonality, increasing volatility in business and client-specific issues.
Our broader view of
strength
in demand remains unchanged. Use any weakness to buy into IT names.
However,
more than stock- or sector-specific issues, shares are being buffeted by
macroeconomic
and liquidity-related factors such as expectations of an immediate interest
rate increase in the US. Interestingly, despite dovish comments from the US
Federal Reserve, the Indian markets ended down this week, restricting a
pull-back seen in big IT stocks this quarter.
