GOLDEN RULES FOR TRADING

I. T. Stocks Outlook for the week – 28.09.2015 to 01.10.2015 May see buying interest unless RBI cuts rates

I. T Stocks Outlook for the week – 28.09.2015 to 01.10.2015
May see buying interest unless RBI cuts rates

The information technology companies are expected to witness continued buying interest unless the Reserve Bank of India cuts interest rates. Majority of market participants expect the RBI to cut the repo rate by 25 basis points, while some hold the view that the central bank may maintain the current rates.

However, repo rate cut of up to 25 basis points has been factored in, and if announced, is unlikely to cause major triggers. We believe that if the RBI does cut the rates, market players are seen exiting defensive stocks such as IT and pharmaceutical to invest in the banking sector. However, this is expected to be a short-term trend.

In the week, the sector has witnessed a high rollover of long positions, as the rupee is expected to continue depreciating against the US dollar. Yesterday, the Indian currency ended at 66.1550 rupees to a dollar. IT sector are bullish on Wipro Ltd and Infosys Ltd due to recent announcements of deal wins and expansion plans made by them.

Prompted by the strong order pipeline, Wipro said it is increasing its workforce in Qatar over the next 12 months and also scale up near-shore delivery centres there. Infosys Ltd is set to get a 13.2-bln-rupee order to develop and provide software solution for implementing the goods and services tax regime.

In the week, HCL Technologies Ltd launched a platform integrated with automation services while Tata Consultancy Services Ltd launched analytics-based software solution. We are expecting bullish about IT companies' investments in digital services.

The top four IT companies--HCL Technologies, TCS, Infosys and Wipro—are expected to gain major market share in automation which is expected to be a revenue drivers. HCL Technologies Ltd and Wipro Ltd are likely to continue their focus on automation in infrastructure services.