The Hindu Business Line : IT stocks gain on improving fundamentals

THE IT sector stocks, according analysts, are poised for growth on improving fundamentals. According to Mr Gaurav Dua of Anagram Stockbroking, top-rung IT stocks have been recording double-digit growth quarter on quarter during the fiscal.

"The pricing power for the domestic IT companies has returned. Particularly after the US polls, the outcry over outsourcing has died down. On the contrary, the US corporations have stepped up their budget on IT spending," he added.

According to Mr Ajay Jaiswal of Lohia Securities, the US manufacturing companies are increasingly looking towards Indian IT companies for cost reduction. "Apart from the top four — Infosys, TCS, Wipro and Satyam — IT stocks such as Tata Elxsi, KIPT, Infotech Enterprise, HCL Technology and Geometric Software, are having renewed attention of the market players."

Analysts also pointed out that recruitment numbers for the IT companies have also been rising at a steady rate during the current fiscal confirming the growth prospects in turnover. "Infosys and Wipro each have reported additional employment of around 4,000 in every quarter so far," Mr Dua observed.

Though forex fluctuation remains a worrying factor, all the players have immunised themselves with adequate cover, Mr Jaiswal added.

According to Mr Rajesh Agarwal of CD Equisearch, domestic technology companies have been reporting a compound annual growth rate of around 46 per cent. Global research and consultancy firms such as McKinsey, Giga and Forrester continue to be bullish about Indian IT companies because of comparative cost and quality advantages.

The current buoyancy in the Indian IT stocks is also reflected in ADR prices on the Nasdaq.

Among the top IT stocks, Infosys today moved up by 3.1 per cent, while Satyam made a gain of 2.7 per cent followed by Wipro at 2.3 per cent. TCS closed with a gain of 1.8 per cent.

The mid-cap IT stocks fared better. Among them, Onward Technology finished with a gain of 9.9 per cent, Tata Elxsi with a profit of 6.8 per cent, Mphasis BFL with 5.2 per cent and NIIT Tech with 1.3 per cent.

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