GOLDEN RULES FOR TRADING

IT Stocks Outlook for the week – 04 to 08.04.2016 Seen positive; HCL Tech, Geometric to be in focus

IT Stocks Outlook for the week – 04 to 08.04.2016
Seen positive; HCL Tech, Geometric to be in focus

Stocks of information technology companies are seen trading with a positive bias next week, ahead of the announcement of their quarterly financial results. HCL Technologies, expected to acquire stake in Geometric, will be in focus. The Reserve Bank of India will detail the first monetary policy statement for 2016-17 (Apr-Mar) on Tuesday. Largely, it is expected to cut the repo rate by at least 25 basis points.

The rupee, which has been strengthening against the dollar through the past few days, is expected to
rise if RBI cuts rates. On Thursday, the rupee closed at 66.25 against the dollar. This is seen
marginally impacting the information technology sector, the majority of whose business is accounted
for by the US. Investors and market participants are on a wait-and-watch mode for any growth-related statements from companies in the sector.

Infosys, which will announce its Jan-Mar earnings on Apr 15, will kick-off the earnings season for
information technology companies. The Bengaluru-based firm, Infosys, is expected to outpace Tata
Consultancy Services in Jan-Mar quarterly results. We expect TCS' earnings for Jan-Mar to be slightly lower than those of Infosys. HCL Technologies is set to acquire engineering solutions company Geometric have improved the sentiment of investors on both companies. HCL Technologies will acquire 31.1% promoter stake in Geometric in a share-swap deal, which values the latter at $150-200 mln. The board of directors of Geometric met yesterday to discuss various strategic and restructuring options, the company said. If the deal goes through, HCL Technologies shares are expected to see good buying and the same is reflected in geometric stock price to see further upside.