I.T Stocks
Outlook for the week – 27 to 31.10.2014
( www.rupeedesk.in )
Stocks of information technology
companies are expected to trade in the negative next week as
Wipro's earnings numbers
announced on Wednesday dampened market sentiment. In the Jul-Sep
quarter, Wipro's IT services
revenues grew merely 1.8% sequentially to $1.77 bln lagging its
peers Infosys (3.1%) and Tata
Consultancy Services (4.6%).
For most IT services companies,
investors closely monitor the dollar sales numbers as clients
overseas get billed in dollars.
Wipro has guided revenue in the
range of $1.81 bln to $1.84 bln for the third quarter ended Dec,
implying a sequential revenue
growth of 2-4%. Even in terms of net profit, Wipro's Jul-Sep
consolidated net profit declined
1% sequentially to 20.85 bln rupees as operating margins
declined to 22.0% from 22.8% in
the previous quarter.
Wipro's management had said
during the earnings that it continued to face "headwinds" in
certain geographies such as
Europe.
The market was closed on Thursday
and Friday though it had opened for a special trading
session on Thursday. During this
"Muhurat Trading", the 50-share Nifty closed at a one-month
high of 8014.55 though Wipro fell
4.01% to close at 560.25 rupees on the National Stock
Exchange.
Next week, investors will keep an
eye on mid-sized IT services firm Mphasis which is scheduled
to announce its second quarter
results on Wednesday.
Investors will continue to
closely track the rupee as currency movement is crucial to IT
companies. Typically, for every
1% change in the rupee-dollar equation, margins of Tier I Indian IT companies are impacted
by 25-35 basis points.
