IT Stocks Outlook for the week – 06 to 10.06.2016
(Seen up next week on weak rupee; US
jobs data eyed)
( www.rupeedesk.in )
The shares of information technology companies are seen trading
with a positive bias next week on continued fall of the rupee against the dollar. The
stocks in the sector will also track the broader market, which this week was buoyed by
robust Jan-Mar GDP numbers and above-normal monsoon forecast by the India
Meteorological Department. India's GDP grew at 7.9% in Jan-Mar, the highest in the past six
quarters. The Nifty 50 today ended at 8220.80, nearly 0.8% higher from previous week's
close. The S&P BSE Sensex ended up 0.71% week on week at 26843.03. The Rupee
weakening will continue to have a positive bearing on IT stocks. The rupee has
weakened over the last two weeks in anticipation of a rate hike by the US Federal
Reserve.
We are expecting that Wipro, HCL Technologies and Tech Mahindra as
they are perceived as undervalued and some recovery is likely near term.
Infosys and TCS are fairly priced; Wipro and HCL Tech are cheap. HCL Tech's last
quarter margins were weak; hence the stock is trading at cheap valuation and is likely
to rise.
However, as the company has started to bag contracts the stock can
see a "decent" movement. On Thursday, the company announced a $75-mln contract
win from the motor vehicles department of Nevada, US. Negative trend is seen in
midcap stocks as growth is seen stagnating
and valuations are expensive.
