IT Stocks Outlook for the week – 24 to 28.08.2015
Upbeat
on weak rupee, grim broader market scenario
( www.rupeedesk.in )
Stocks
of information technology companies are seen broadly positive next week due to
the rupee's depreciation against the dollar, and weak market sentiments. The
broad market is seen negative next week owing to concerns over slowdown in the
global economy. Market participants are likely to exit other sectors and invest
in the IT sector, considered a safe bet in the current scenario.
However,
the positive bias will be more towards large cap IT companies. The rupee is
expected to continue depreciating against the US dollar and is likely to break
the 68 per dollar level over the next few sessions. The rupee ended at 65.8250
per dollar, its lowest closing since Sep 5, 2013. Large-cap IT companies--Tech
Mahindra Ltd, Infosys Ltd and Tata Consultancy Ltd--are expected to be major gainers
of the upward trend as most of their revenues come from operations outside
India.
Analysts
are highly optimistic about Infosys after the Bengaluru-based company's Chief
Executive Officer Vishal Sikka announced the launch of three renewed service
offerings termed 'Aikido'. Sikka has been talking about these service offerings
in every earnings call and investor conference since he took over as CEO last
year, so AiKiDo is the new bottle for old wine - not that one should underestimate
the power of marketing in an increasingly commoditized industry.
Improved
execution (sales, marketing, and delivery) is likely to result in revenue
growth acceleration (converging with that of TCS by FY17).
Mid-cap
IT companies are not expected to gain much from the fall in rupee as a major
part of their revenue does not come from foreign countries. MindTree Ltd and
Oracle Financial Services are seen positive.
