Bruised tech shares bounce back in cautious trade

Monday, 21 April 2003, 07:00 Hrs
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NEW DELHI: India's blue-chip technology stocks, badly battered in the last couple of weeks' trade on lukewarm business outlook projected by software makers, bounced back in early trade Monday on bargain hunting.

Analysts, however, say the market mood continues to be highly cautious and investors would track the financial numbers of other heavyweight software makers in the days ahead before putting more money on bruised technology counters.

At noon the stock market benchmark 30-share Bombay Stock Exchange sensitive index or Sensex was trading at 2,994.36, representing a gain of 9.86 points or 0.33 percent over its previous trading session's close.

The market index fell 0.5 percent last week after poor results and disappointing guidance from software bellwether Wipro, India's most valuable software company by market capitalisation, dented investor sentiment.

Stocks of companies such as Wipro and Infosys Technologies, India's largest listed software exporter, came under heavy hammering, triggered by fears that earning of top software makers might slow in the current fiscal.

"Today's (Monday's) recovery in shares of software companies shows that the tech story may not be over yet on the Indian bourses despite all the talk of gloom and doom," said Neeraj Deewan, an analyst with Quantum Securities.

"The long-term gains of tech investments are still intact though spectacular short-term gains are unlikely to be seen any more. I think it is the maturing phase for tech share investors," Deewan said.

He said that the growth story of Indian software companies would not die down even though industry leaders like Infosys and Wipro had projected sharply lower profit growth in the current fiscal as compared to previous years.

Reflecting the bullish trend in the market, shares of Wipro rose 2.4 percent to 906 in early trade Monday after registering massive losses in the last few trading sessions on growth concerns.

Shares of HCL Technologies, a New Delhi-based software development and services major, was trading at 147.15, up nearly four percent from previous close, and Hyderabad-based Satyam Computer rose 4.4 percent to 150.60 in early trade. Satyam will unveil its January-March quarterly results on Thursday.

Infosys stocks, on the other hand, were trading 0.5 percent lower at 2,952 on profit taking.

Wipro Technologies last week said pressure on prices would continue to damage margins in the months ahead, pulling down its share price 8.25 percent to its lowest level in nearly four years.

The revelation from India's third-largest software exporter came a few days after Infosys Technologies shocked the market with a tepid forecast.

Infosys, which is listed on the tech-laden Nasdaq stock exchange, warned that sliding profit margins would slow profit growth in the current fiscal year, sparking a massive sell-off in stocks.

Bangalore-based Wipro and Infosys are India's largest listed software services companies after the privately owned Tata Consultancy Services, a technology arm of the diversified business conglomerate Tata Group.

The financial performance of companies like Wipro and Infosys is treated as the barometer for India's high-profile software industry's health.

"What we need to understand is that Infosys and Wipro are just like any other fundamentally-strong old economy companies that will grow at a sustained and rational growth rate," said a broker with the Bombay Stock Exchange.

"Although the tepid growth forecast by top Indian software firms are disappointing, it will bring investors down to earth and remove any kind of irrational exuberance," the broker added.
Source: IANS
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