The Hindu Business Line : Infosys numbers fail to cheer up tech stocks

Mumbai, Jan. 11 The better than expected results of the IT bellwether Infosys Technologies failed to perk up IT stocks. The BSE-IT index too was amongst the worst performing sectors of the day.

The BSE-IT index was down by 1.04 per cent to close at 41.3.88, 43 points lower than Thursday’s close. The sector has been mostly in the red since the year 2008 beginning.

Share prices

The returns from the sector have been 7.41 per cent lower than what it was a month ago. Satyam and Infosys were among the top losers of the day in the Benchmark index, the Sensex. While Satyam was down 2.24 per cent, Infosys lost 1.38 per cent.

Among the companies that witnessed a fall in their share prices were Moser Baer, which was down by 4.27 per cent, MphasiS (3.58 per cent), Tech Mahindra Ltd (3.06 per cent) and Wipro (0.34 per cent).

TCS Ltd and Aptech Ltd were among the stocks that saw a rise in their share prices.

Higher levels

“The Sensex opened with a positive gap in the morning due to the better than expected Infosys results. But we saw some resistance coming in from the investors when the Infosys share prices reached higher levels. There was definitely profit taking happening at these higher levels. That is the reason why there was a slip in the prices of Infosys shares,” said an analyst with a brokerage.

The IT bellwether saw a 25.2 per cent rise in third quarter net profit at Rs 1,231 crore riding on strong growth in Europe and financial services. The Bangalore-headquartered company posted revenues of Rs 4,271 crore for the October-December quarter, a year-on-year growth of 16.9 per cent.

The Nasdaq-listed firm also said it crossed $3 billion in revenues in the first nine months, and reached $1 billion in net profits in the last 12 months. Revenues from Europe went up to 28.6 per cent of the total income in the third quarter, up from 26.8 per cent a year ago.

Business momentum

“Even though Infosys’s margins have increased, its growth in terms of volumes have been rather disappointing this quarter. This could be the reason why we saw a fall in the Infosys prices. Satyam at their Rs 410 levels I’m surprised why they were trading in the red. There seems to be some sort of profit taking happening in the markets with regard to Satyam,” said a Head of Research.

Market watchers feel that the business momentum in the IT sector seems to be just about reasonable. Until there is some clarity regarding the IT budget it would be difficult to predict the movement within the sector.

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