I.T Stocks Outlook for the week – 18 to 22.08.2014
( www.rupeedesk.in )
Next week, stocks of information technology stocks are likely to move in response to
macroeconomic trends and company-specific news. As all market-moving events like
quarterly financial results are over, IT stocks are not expected to show any sector-specific
trend but move with the overall market sentiments.
The current quarter (Jul-Sep) is traditionally a strong quarter for IT companies as
majority of the revenue flows in during this period. So, a general optimism is likely to
prevail.
Investors will continue to closely track the rupee as the 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. However, volatility in the rupee has
significantly come down and consequently any stock movement based on the rupee is
unlikely.
Next week, the immediate events that will be watched by the market the GST (Goods and
Services Tax) meeting on 20th August. Given the hype and preparation for Modi's
speech, market expectations on announcement over big reforms are high.
Overall, the market was in the green zone this week. "Markets rose by more than 0.5%
last day and by more than 3% for the week on the back of expectations of further reforms from the government and reduced concerns on the geopolitical situation across the world.
