Despite encouraging quarterly results of IT companies like Infosys, iGATE and Mastek, technology stocks have had a poor showing, with share prices falling between two and nearly 17 per cent, mainly due to global weakness in the sector, strengthening rupee and fears of slowdown in the US.
Back in the country, the “muted guidance” or a sombre outlook by Infosys coupled with poor showing by TCS, led to IT stocks taking a terrific beating. Between April 11 and 19, since the first set of tech quarterly numbers started to come out, the BSE IT Index has fallen a whopping 8.41 per cent (in nine days). By comparison the BSE Sensex has fallen only 4.11 per cent during this period.
Contrary to popular perception that results have been bad, quarterly results of IT companies were by and large satisfactory and inline with expectations, according to the data furnished by the companies. Seven out of the nine IT companies, which have declared results so far, had a positive growth in net profit for the quarter ended March 31, 2005 over the year-ago period. And 8 out of the 9 companies surveyed had a positive growth in sales revenue during the period in review.
According to Rajiv Malik of RNM Securities there were certain factors, which were resulting in IT stocks taking a beating despite satisfactory quarterly numbers. These were a strengthening rupee, a global weakness in IT and concerns over slowing down of economic growth in the US-which is the main market for Indian IT companies.
Pratik Gupta, analyst at Citigroup's Smith Barney struck a note of optimism in an otherwise gloomy scenario, and opined that IT services could regain growth leadership in India over the next two years.
Among the IT companies that have declared results so far only CMC and TCS have had a negative run.
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Wednesday, April 20, 2005
