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Selling in tech stocks to rock investor sentiment
Monday, 14 April 2003, 19:30 IST
MUMBAI: India's badly bruised stock investors are set for a rocky ride in the week ahead on sustained selling in technology shares in the wake of fears that earnings of blue-chip software makers would slow in the current fiscal.
Analysts say large-scale profit taking in shares of leading software companies, which started last week after bellwether Infosys Technologies projected disappointing earnings outlook, would continue to drag down the market index.
The Infosys forecast has cast a shadow on the fortunes of other high-profile software firms.
"With the Iraq war mostly behind the market, I think the investors would continue to focus on the financial performance of corporate houses, mainly software companies," said a fund manager with a foreign brokerage firm.
"A host of heavyweight software companies will unveil their quarterly results in the week ahead. While most of them may manage to meet their last quarter's projection, the business outlook is not going to be very strong.
"The market will continue to face some risk on that front. While the panic selling, which was witnessed in last two days' trading sessions, may settle down a bit, the overall market mood would continue to be gloomy," the fund manager told IANS.
The stock market barometer 30-share Bombay Stock Exchange sensitive index or Sensex closed on Friday at 2,997.87, a loss of 169.83 points or 5.36 percent from its previous week's close.
India's corporate financial results period, which was kicked-off by Infosys last week on a negative note, will gain momentum in the week ahead with a host of tech and traditional firms unveiling their quarterly and fiscal 2002-03 numbers.
"The investor fears that the Iraq war and the killer pneumonia would badly affect the revenue growth of companies in the current fiscal seems to be coming true," said a broker with the Bombay Stock Exchange.
"The investors are bracing for a raft of negative news on the corporate earnings front this year. Infosys has already given an indication of things to come and I don't expect any significant shift in other companies' revenue guidance."
Technology stocks, led by Infosys Technologies, India's largest listed software exporter, triggered massive sell-off on the bourses towards the end of the last week's trading sessions.
Infosys is the first among blue-chip software companies to announce financial results Thursday. Most analysts and investors look to Infosys' performance as an indicator of the IT industry's health.
The company reported a net profit increase of 23 percent in its January-March quarter, but its growth outlook of 27 percent for the next year sharply impacted the stock market.
The company's net profit for the quarter ended March 31 touched 
2.59 billion, up from 2.10 billion logged in the January-March quarter of fiscal 2001-02.
But its outlook for 2003-04 was placed at a comparatively conservative revenue growth of 26-27 percent, taking into account macro-economic factors along with the impact of the Iraq war and the Severe Acute Respiratory Syndrome (SARS).
The stocks of the country's showpiece in the IT sector plummeted 25 percent soon after the results were announced.
"While on one hand, Infosys' quarterly profit growth failed to meet market expectations, its disappointing earning forecast dented investor sentiment very badly," said a market analyst.
"The company's forecast has cast a shadow over hopes of a rebound in the IT industry in the near term," the analyst noted.
Shares of Infosys fell a massive 40 percent from its previous week's close to 2,617.50 on large-scale profit taking. The impact of Infosys' gloomy revenue outlook was also felt on the counters of almost all leading software firms.
HCL Technologies, a New Delhi-based software development and services firm, ended 10.5 percent lower at 146.80 and Hyderabad-based Satyam Computer closed with a loss of 22.5 percent at 144.75.
In the old economy sector, Gujarat Ambuja Cements lost 1.5 percent to touch 162.40 despite the company's net profit for the quarter ended March touched 668.6 million on total income of 4.82 billion.
Hero Honda Motor, India's largest motorcycle maker, on the other hand, rose 6.4 percent to 205.90 after the company announced a dividend of 900 percent along with its quarterly results.
For the quarter ended March 31, the company posted a net profit of 1.48 billion on total income of 12.48 billion. For the year ended March, the company's net profit stood at 5.80 billion, up from 4.62 billion logged in previous fiscal.
Source: IANS
2.59 billion, up from 2.10 billion logged in the January-March quarter of fiscal 2001-02.
But its outlook for 2003-04 was placed at a comparatively conservative revenue growth of 26-27 percent, taking into account macro-economic factors along with the impact of the Iraq war and the Severe Acute Respiratory Syndrome (SARS).
The stocks of the country's showpiece in the IT sector plummeted 25 percent soon after the results were announced.
"While on one hand, Infosys' quarterly profit growth failed to meet market expectations, its disappointing earning forecast dented investor sentiment very badly," said a market analyst.
"The company's forecast has cast a shadow over hopes of a rebound in the IT industry in the near term," the analyst noted.
Shares of Infosys fell a massive 40 percent from its previous week's close to 2,617.50 on large-scale profit taking. The impact of Infosys' gloomy revenue outlook was also felt on the counters of almost all leading software firms.
HCL Technologies, a New Delhi-based software development and services firm, ended 10.5 percent lower at 146.80 and Hyderabad-based Satyam Computer closed with a loss of 22.5 percent at 144.75.
In the old economy sector, Gujarat Ambuja Cements lost 1.5 percent to touch 162.40 despite the company's net profit for the quarter ended March touched 668.6 million on total income of 4.82 billion.
Hero Honda Motor, India's largest motorcycle maker, on the other hand, rose 6.4 percent to 205.90 after the company announced a dividend of 900 percent along with its quarterly results.
For the quarter ended March 31, the company posted a net profit of 1.48 billion on total income of 12.48 billion. For the year ended March, the company's net profit stood at 5.80 billion, up from 4.62 billion logged in previous fiscal.
Source: IANS