I.T Stocks
Outlook for the week – 03 to 07.11.2014
( www.rupeedesk.in )
Stocks of information technology
companies are expected to continue trading on the green zone
next week after a stellar
performance this week on signs of an economic revival in US.
The real gross domestic product
in the US increased at an annual rate of 3.5% in Jul-Sep,
according to the advance estimate
released by the Bureau of US is the largest market for Indian
IT services companies and an
economic revival there invariably means better business for
technology companies in India. In
the Jul-Sep quarter, North America contributed 60.8% to
Infosys' total revenue, while
North and Latin America together contributed 52.9% to Tata
Consultancy Services' revenue.
During the week, mid-sized IT
services company Mphasis reported a 1.7% sequential decline in
consolidated revenue to 14.6 bln
rupees because of a slowdown in its US mortgage industry
service business.
Yesterday, all IT stocks closed
significantly higher on week except Wipro, which ended up only
0.61%. Wipro posted a weak second
quarter earnings last week wherein its IT services revenues
grew merely 1.8% sequentially,
lagging its peers Infosys (3.1%) and TCS (4.6%).
Infosys stocks yesterday closed
at a new high of 4051.25 rupees on the National Stock Exchange
on optimism in the US and in line
with the share indices.
The Sensex hit a lifetime high of
27894.32 intraday and ended at an all-time closing high of
27865.83, up 519.50 points or
1.9% from Thursday's close. The broader 50-share Nifty rose
above 8300 and hit a new high of
8330.75 points intraday before ending at a record closing high
of 8322.20, up 153.00 points or
1.9%.
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.
