IT Stocks Outlook for the week – 12 to 16.12.2016
IT Stocks Outlook for the week – 12 to 16.12.2016
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With the US Federal Reserve's policy meeting due next week, shares of information technology companies are likely trade in a thin range due to a cautious view on sector and likely weakness in the broader market. The domestic equity market is seen weak next week, following disappointing growth in India's industrial sector in October, data on which was released after market hours on Friday. The data showed that industrial output unexpectedly contracted 1.9% in October, compared with growth of 9.9% a year ago and economists' estimate of 0.3% growth. Investors will track the US Fed's policy meeting, the outcome of which is due on Wednesday. While the central bank is widely expected to raise interest rates by at least 25 basis points, market participants will focus on US Fed chair Janet Yellen's speech for cues on the course of action the Fed might take. While stocks of IT companies are likely to benefit if the Fed raises rates, as it would lead to a stronger dollar, a rate hike of 25 bps has already been priced in. However, a steeper hike in rates or status quo could lead to IT stocks recording sharper moves in either direction. Some investors have turned cautious on the sector, seeking clarity on the likely immigration policies under US President-elect Donald Trump. On Friday, mid-cap IT stocks outperformed their large-cap peers, and this trend is likely to continue. While the large-cap companies were struggling with a transition phase, smaller companies with niche verticals were faring well and this was reflected in their stock performance. Any depreciation in the rupee is also likely to benefit mid-cap companies more, as they are more sensitive to currency movement
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IT Stocks Outlook for the week – 12 to 16.12.2016
With the US Federal Reserve's policy meeting due next week, shares of information technology companies are likely trade in a thin range due to a cautious view on sector and likely weakness in the broader market. The domestic equity market is seen weak next week, following disappointing growth in India's industrial sector in October, data on which was released after market hours on Friday. The data showed that industrial output unexpectedly contracted 1.9% in October, compared with growth of 9.9% a year ago and economists' estimate of 0.3% growth. Investors will track the US Fed's policy meeting, the outcome of which is due on Wednesday. While the central bank is widely expected to raise interest rates by at least 25 basis points, market participants will focus on US Fed chair Janet Yellen's speech for cues on the course of action the Fed might take. While stocks of IT companies are likely to benefit if the Fed raises rates, as it would lead to a stronger dollar, a rate hike of 25 bps has already been priced in. However, a steeper hike in rates or status quo could lead to IT stocks recording sharper moves in either direction. Some investors have turned cautious on the sector, seeking clarity on the likely immigration policies under US President-elect Donald Trump. On Friday, mid-cap IT stocks outperformed their large-cap peers, and this trend is likely to continue. While the large-cap companies were struggling with a transition phase, smaller companies with niche verticals were faring well and this was reflected in their stock performance. Any depreciation in the rupee is also likely to benefit mid-cap companies more, as they are more sensitive to currency movement
