IT
Stocks Outlook for the week – 02 to 06.05.2016
Stock-specific movement seen; HCL
Tech seen weak
( www.rupeedesk.in )
The movement in the information
technology sector next week is expected to be stock-specific, with
a majority of companies trading in a
range. Market participants are expected to follow the earnings
trend of IT companies closely to take
investment decisions. The Indian currency, which closed 66.4
rupees against the dollar yesterday,
is seen strengthening the following week. Sentiments in US
market have weakened on account of
poor economic data and unclear stance of US Federal Reserve.
However, these factors are not
expected to have a significant impact on the IT sector on account of
on going results. The US Federal Open
Market Committee left the federal funds target rates unchanged at 0.25-0.50% but
omitted language from its March statement implying global economic risks.
Additionally, data released on Thursday showed that US first-quarter GDP grew
by only 0.5%, lower than economists' estimates of around 0.7%. Following
disappointing Jan-Mar earnings, analysts have cut the target price on HCL
Technologies' stock. The company's consolidated Jan-Mar net profit grew a mere
0.3% sequentially to 19.26 bln rupees as compared to expectations of 19.53 bln
rupees. The company's operating margin stood at 22.2% as against 21.5% a
quarter ago, disappointing the market. Wipro's weak guidance and Tata
Consultancy Services lower-than-expected Jan-Mar margins have led to weakness
in the stocks.