IT Stocks Outlook: To outperform mkt next wk as Accenture Q2 strong

[K.Karthik Raja]

IT Stocks Outlook: To outperform mkt next wk as Accenture Q2 strong
Friday, Mar 28

Information technology shares are seen outperforming key
indices in the coming week after strong second quarter earnings of
Accenture lifted hopes of a robust guidance from Infosys Technologies
for 2008-09 (Apr-Mar)
Infosys will detail its 2007-08 earnings Apr 15, when it will also
issue
guidance for the next financial year.
Accenture that late Thursday detailed earnings for the quarter
ended
February said there was higher traction for outsourcing as companies
were trying to cut costs and increase efficiency amid turbulent times
in the U.S. economy and global financial markets.
Accenture reported second-quarter earnings rose to $406.6 mln, or
64 cents a share, from $296.7 mln, or 47 cents a share, in the same
period a year ago. We were expecting EPS of 60 cents for the quarter.
Earlier, Indian IT companies took a slightly negative cue from
lower-than-expected earnings of Oracle, but analysts said Oracle's
weak performance did not reflect on Indian IT companies earnings
prospects because business models differ.
Oracle depends on licence revenue for its products, while all
large-cap Indian IT companies are dependent on outsourcing and
offshoring deployment of technology.
Mid-cap shares in the sector are likely to continue rising sharply
if
broad markets remain positive, as their valuations have been beaten
down significantly. Most of them are now trading at 6-8 times
2008-09 earnings, compared with 14 times earlier.
KPIT Cummins, Hexaware Technologies, and Subex Azure are seen
performing better than peers.
3i Infotech may rise too, as there is talk the company may win a
large order soon.
The next big event for the sector, however, continues to be
Infosys'
earnings.
Week-on-week closing prices of key software shares, in rupees, on
National Stock Exchange:
.
Company Mar 28 Mar 20 Change
(in %)
HCL Technologies 271.35 254.90
6.5
Infosys Technologies 1,521.20 1,343.70
13.2
Satyam Computer Services 408.65 391.15
4.5
Tata Consultancy Services 871.05 811.45
7.3
Wipro 453.50 378.40
19.8
.
INDICES
CNX IT Index 3,904.70 3,501.15
11.5
NSE Nifty 4,942.00 4,573.95
8.0
BSE Sensex 16,371.29 14,994.83
9.2. End
.
K.Karthik Raja