GOLDEN RULES FOR TRADING

IT Stocks Outlook for the week – 02 to 06.05.2016 Stock-specific movement seen; HCL Tech seen weak

IT Stocks Outlook for the week – 02 to 06.05.2016
Stock-specific movement seen; HCL Tech seen weak

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.