IT Stocks Outlook for
the week – 27.06.2016 to 01.07.2016, In range, seen taking cues from broad
market
Stocks of information technology companies are seen trading
in a range next week, and are likely to
take cues from the broad market. The UK's decision to exit
the European Union left the domestic as
well as global markets in the red. This is seen having a
negative impact on shares of IT companies
which have 50-60% of revenue coming from their US operations
and around 25% from European
operations.
However, analysts are hopeful that markets will recoup
losses next week. In either scenario, a major
fall in IT stocks is not expected, even as investors are
expected to be cautious next week. With the
UK exiting the European bloc, domestic IT companies are
expected to have a plethora of challenges
ranging from immigration laws, uncertain client budgets,
evolving economic conditions, and need for
a strategy for unfathomable market conditions in the near
term, even as 'Brexit' may hold some
opportunities in the long term.
Yesterday, the pound sterling and the rupee declined around
7% and 1%, respectively, against the
US dollar. The Indian currency closed at 67.9600 against the
greenback yesterday. In a relief to the
sector, the rupee is expected to weaken further against the
dollar as risk-averse sentiment is seen
continuing next week. Analysts see Tech Mahindra's shares as
a good buy for market participants
Looking to make short-term investments. Traders are expected
to prefer stocks of sector leaders Tata
Consultancy Services and Infosys who have proven to be safe
bets in the past.