K.Karthik Raja - Rupeedesk Advisory: I.T Stocks Outlook

Showing posts with label I.T Stocks Outlook. Show all posts

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.

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

( www.rupeedesk.in )

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

market.

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.

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

( www.rupeedesk.in )

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

market.

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.

I.T Stocks Outlook for the week – 23 to 27.06.2014

(www.rupeedesk.in)

Movement of the rupee against the greenback will set the tone for stocks of information

technology companies over the next week. The geopolitical conflict in Iraq has kept the

rupee under pressure in the last few sessions on fears of a disruption in crude oil supplies

and rise in inflation.

Outlook for the IT sector remains positive in the backdrop of weak rupee, as it improves

companies' revenue visibility. Any further fall in the rupee could trigger buying in these

stocks. Typically, for IT companies, every 1% fall in rupee adds about 20-30 basis points

to the operating profit margins. Also, investors are now slowly moving towards non- cyclical stocks such as IT, We are expect rupee trading weak over the next few sessions

due to the tensions in Iraq. Further, worries over higher inflation may prove negative for

the Indian rupee.

Outlook for the sector also got a boost from the US Federal Reserve giving a positive

assessment of the world's largest economy, and its commitment to retaining its

accommodative monetary policy. The US accounts for a majority of Indian IT companies'

revenue. The biggest gainers in the sector during the week were majors Infosys and Tata

Consultancy Services that gained 4.1% and 3.6%, respectively.