I.T Stocks Outlook for the week – 11 to 14.08.2014

I.T Stocks Outlook for the week – 11 to 14.08.2014

Stocks of information technology stocks are likely to take cues from macroeconomic
factors. As all significant events impacting the market such as financial results are over,
IT stocks are not expected to show any sector-specific trend but move with the broader

Investors will continue to closely track the rupee as currency movement is crucial for IT
companies. IT companies bill majority of their revenues in dollars and consequently they
earn more if the Indian currency falls against the dollar. Typically, for every 1% change
in the INR/USD equation, margins of tier 1 Indian IT companies are impacted by 25-35
basis points.

The rupee touched an over five-month low against the dollar earlier today as global
tensions mounted after US President Barack Obama authorised air strikes in Iraq, and as
tensions between Ukraine and Russia showed no signs of easing. The rupee closed the
week at 61.14 per dollar.

Global markets closed in the negative for the week on the back of geopolitical tensions.
The US authorising targeted air strikes on Iraq was the latest trigger. There was growing
unease over the crisis in Ukraine.

Indian markets were not insulated from the selloff in global markets as it signed off the
week in the negative zone... Going ahead, geopolitical tensions would continue to be in
limelight, we believe. Investors are advised to utilise the opportunity to buy into quality
stocks with strong management pedigree.

Among IT stocks, Infosys was the biggest gainer over the week. Infosys stocks ended up
4.23% yesterday from last Friday's close, on optimism around Vishal Sikka who came on
board as the chief executive officer and managing director on August 1. Investors are
expecting a turnaround from Sikka and Infosys stocks are likely to be trading in the
positive zone next week. Any commentary by Sikka on the company's plans and outlook will be closely watched upon by the market.