I.T Stocks Outlook for the week – 04 to 08.05.2015

I.T Stocks Outlook for the week – 04 to 08.05.2015

 ( www.rupeedesk.in )

Stocks of information technology companies may see a slight bounceback next week if a

government reiteration that it will not impose minimum alternate tax on capital gains made from securities transactions of foreign companies leads to a broader market recovery. Finance Minister Arun Jaitley today made the clarification in Parliament, while speaking on the Finance Bill in Lok Sabha after markets closed.

The Indian stock markets, largely driven by foreign institutional investors, have been on a losing spree for the last two weeks over media reports that the government plans to bring all foreign investors into the tax net. Foreign investors comprise a large chunk of the investment in frontline IT stocks like Infosys Ltd, Tata Consultancy Services Ltd and Wipro Ltd, and these stocks have been among the biggest losers in the market due to FIIs' withdrawal. Moreover, over the last three weeks, the sector reported its most dismal quarterly performance in recent years.

Among the latest, KPIT Technologies lost about a third of its market capitalisation after the

company reported a 28% sequential fall in its key SAP business unit for Jan-Mar. Similarly,

Infosys, which reported its Jan-Mar results Friday, it was seeing a secular trend towards lower and lower prices in traditional IT services outsourcing, and plans to cope with the situation by using more automation.

The only major IT company yet to detail its results is Tech Mahindra, which will announce its numbers only on May 26. Most companies prefer to see the poor results as an exception rather than a trend. Commenting on his company's lacklustre results, TCS Chief Executive N. Chandrasekaran said the March quarter results cannot be taken as an Indicator for future performance.

Companies firm up their IT budgets and plans for the year over the first two months, and most of the actual allotments (to discretionary projects) happens towards the end of the quarter. However, in the short term, IT stocks would participate in any bounce back in the broader market.

I.T stocks Outlook for the week – 30.06.2014 to 04.07.2014

I.T stocks Outlook for the week – 30.06.2014 to 04.07.2014
(www.rupeedesk.in)

A weak monsoon, and expectations of a good first quarter will lend buoyancy to major

information technology stocks next week. A weak monsoon has meant that people are

taking refuge in defensive stocks like pharma and IT. That is likely to continue this week.

Expect major IT stocks to outperform the market. We are already seeing that happening.

IT companies witnessed some buying this week as investors chose to churn portfolios to

defensive bets.

IT stocks that have been underperforming for the past few weeks on fears of the rupee

strengthening are expected to finally do better given that the rupee continues to hover

around the 60-mark to a US dollar.

Currency movement for IT companies is crucial as they are heavily dependent on

overseas markets for a major chunk of their revenues. So, any rise in the rupee would hurt

them. After beginning the month at a high of 59.16, the rupee has weakened and

continues to hover around the 60-mark, ending the day today at 60.09, down 0.09% from

the previous close.

While HCL Technologies and Tata Consultancy Services are expected to be the stars of

the show, with the latter expected to reach its previous top level, Infosys is likely to surprise this week.

I.T Stocks Outlook for the week – 23 to 27.06.2014

I.T Stocks Outlook for the week – 23 to 27.06.2014
(www.rupeedesk.in)

Movement of the rupee against the greenback will set the tone for stocks of information

technology companies over the next week. The geopolitical conflict in Iraq has kept the

rupee under pressure in the last few sessions on fears of a disruption in crude oil supplies

and rise in inflation.

Outlook for the IT sector remains positive in the backdrop of weak rupee, as it improves

companies' revenue visibility. Any further fall in the rupee could trigger buying in these

stocks. Typically, for IT companies, every 1% fall in rupee adds about 20-30 basis points

to the operating profit margins. Also, investors are now slowly moving towards non- cyclical stocks such as IT, We are expect rupee trading weak over the next few sessions

due to the tensions in Iraq. Further, worries over higher inflation may prove negative for

the Indian rupee.

Outlook for the sector also got a boost from the US Federal Reserve giving a positive

assessment of the world's largest economy, and its commitment to retaining its

accommodative monetary policy. The US accounts for a majority of Indian IT companies'

revenue. The biggest gainers in the sector during the week were majors Infosys and Tata

Consultancy Services that gained 4.1% and 3.6%, respectively.