Posts Tagged ‘IT stocks’

Market Experts Expect IT Stocks to Do Well During 3rd Quarter

Market Experts Expects IT Stocks to Do Well During 3rd Quarter

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With IT Biggy Infosys showing up with better-than-expected results and revenue guidance, IT stocks have turn out to be hot picks.

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This is owing to the factor that market participants are now anticipating good third quarter results on improved global demand scenario.

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Month-to-date, the BSE IT index has returned 4.16 per cent against a marginal 0.51 per cent advance in the BSE Sensex.

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Where IT biggies have climbed as much as 5 per cent during the period, mid-cap and small-cap IT stocks have followed the cues even better.

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“The Infosys numbers have set the tone for the IT sector. The numbers posted by the sector for the third quarter of financial year 2009-10 are encouraging and even the guidance is optimistic.

The analysis shows that revenue visibility has gone up,” said Jagannadham Thunuguntla, head of research at SMC Capitals.

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Financial Technologies shot up 20.55 per cent. Tech Mahindra climbed 14.77 per cent.

Patni Computer jumped 7.20 per cent followed by Polaris Software, Rolta India, MindTree and MphasiS, which climbed 4.67 per cent, 4.11 per cent and 0.33 per cent respectively.

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However, MphasiS and Redington India inched down 0.41 per cent and 0.45 per cent respectively.

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“We expect IT service companies to be more optimistic regarding the macro environment compared with the stance in the previous few quarters.

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While 2010 IT budgets are likely to be flat with a positive bias, managements might not provide significant clarity on them,” the brokerage added.

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The years 2009 and 2010 underline a significant recovery in business optimism and economic conditions.

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Thunuguntla feels signs of recovery have also started appearing in the US and in the global financial sector, which was the genesis of the financial crisis.

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In such a situation, there is no reason why the Indian IT sector shouldn’t do well during the third quarter.

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Understandably, the sector’s fortunes are linked to the value and fluctuation in the dollar.

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A strengthening dollar can put pressure on the profitability margins of IT companies.

But, IT volumes still remain strong, and sector should see healthy performance.

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🙂