IT
STOCKS OUTLOOK FOR THE WEEK – 01 to 05.09.2014
( www.rupeedesk.in )
Stocks of information
technology companies are unlikely to see any sharp corrections,
and will remain range
bound this week.
Investors will
continue to track the rupee as currency movement is crucial for IT
companies. IT
companies bill majority of their revenues in dollars and consequently they
earn more if the
Indian currency weakness against the dollar.
Typically for every
1% change in the rupee/dollar equation, margins of tier 1 Indian IT
companies are
impacted by 25-35 basis points.
However, the rupee
volatility has significantly come down and consequently IT stocks
will remain largely
unaffected by the rupee.
Last week, Infosys
Chief Operating Officer U.B. Pravin Rao at an analyst meet said the
company will be in
better position to share its new strategy in October. He also said
Infosys has retained
its earlier guidance of recording a 7-9% topline growth and margins
between 24-25% for
the current fiscal year.
Rao said that though
Infosys will continue to focus on growth in the short term, it will
focus on achieving
"industry leading" margins in the long term. He said the company
may see short-term
margin volatility due to investments.
This week, the market
will react to the gross domestic product numbers to be released on
Friday and that might
trigger the next directional move. "It's important to note that we are
standing near to the
crucial level in benchmarks so either side move would be sharp.
Also, lack of participation
from the broader segment is still a major concern for the
participants so it's
advised to keep extra caution in stock selection for both trading and
investment
activities.
On Friday, Indian
markets will remain closed for Ganesh Chaturthi, while on Monday the
markets in New York
will be shut for Labor Day