The Hindu Business Line : IT stocks upbeat on Q2 no hopes

Expectations that the second quarter results of the Indian IT services sector would be healthy and that top-tier Indian software companies would continue to report strong volume growth, have been driving interest in software company stocks on the bourses. The BSE-IT Index outperformed other indices on Thursday, with huge buying seen in Moser-Baer, Infosys, Wipro, Satyam, Patni Computer, MphasiS BFL and TCS. The Index was up 2.43 per cent or 104.69 points at 4,404.08.

Analysts maintain that the first quarter this fiscal was an exceptional one, aided by good volume growth as well as a weaker rupee. They expect volume growth to be the major driver of the topline growth in Q2 FY 07, as the impact of the rupee this time around may not be as significant as it was in the first quarter.

Analysts also said the Nasscom and Booz Allen Hamilton report estimating a $40-billion opportunity for India by 2020, from offshoring of engineering services alone, is yet another positive trigger for the sector. This can be seen from growth in export revenues of the Indian IT services. The services export revenues of the Indian IT sector have grown at an impressive CAGR of 35.2 per cent over FY 2003-06 to $17.3 billion. Tier I vendors with scale, wide service offerings, domain expertise, and large in-house trained manpower are well poised to grab the offshore demand. Software major Infosys kickstarts the earnings season on October 11.

Deeptha Rajkumar

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