IT Stocks Outlook for the week – 25 to 29.04.2016
(In
narrow range next week; HCL Tech result in focus)
( www.rupeedesk.in )
Most
information technology stocks are seen trading in a narrow range next week,
with
stock-specific
movement expected in some driven by Jan-Mar earnings and guidance
for
the current financial year.
Weak
guidance last week by Wipro Ltd and industry leader Tata Consultancy Services
Ltd
continue to weigh on the sentiments for the sector. In the coming week, all
eyes
will
be on HCL Technologies Ltd which will detail its quarterly earnings on
Thursday.
The
IT major is expected to report 1.7% sequential rise in Jan-Mar consolidated net
profit
to 19.20 bln rupees and 4.4% rise in net sales to 103.41 bln rupees.
The
market is bullish on the company as most of them are expecting its acquisition
of
Geometric
Ltd as positive, allowing HCL Technologies access to the Mumbai-based
company's
business in automotive and aerospace industries.
So
far, Tata Consultancy Services, Wipro and Infosys Ltd among Nifty 50, and
Mindtree
Ltd and Cyient Ltd among mid-cap IT stocks, have detailed their earnings.
Wipro
shares, which took a beating this week after weak sales growth guidance of 1-3%
for
Apr-Jun, are expected to trade range-bound between 545 rupees and 565 rupees
next
week.
TCS,
which reported 5.4% sequential rise in consolidated net profit at 64.1 bln
rupees
and
4% growth in net sales to 284.5 bln rupees, traded in the red due to operating
margins
falling 50 basis points to 26.1%. Infosys was the better performer among IT
stocks
last week as investors remained upbeat on the company's dollar sales growth
guidance
of 11.8-13.8% in FY17, consistent with 10-12% growth forecast by industry
body
National Association of Software and Services Companies.
Mid-cap
stocks Mindtree and Cyient recorded moderate growth in sales but drop in
margins
eroded the sentiment. The rupee-dollar rates are expected to remain flat over
the
week till Federal Open Market Committee meeting on Apr 26-27.