Infotech stocks may surge 3%

Key technology shares are thus week seen moving in line with broader indices, which are expected to rise 3-4 per cent, analysts said. Shares of mid-sized companies are seen outperforming their larger peers on view that valuations are attractive, dealers said.

On Sunday, the CNX IT index rose 0.32 per cent to 3815.05 from 3802.95 on Friday.

"The Nifty is likely to rise to 3126-3148 in the next 6-8 trading sessions," said Avinash Bachate, technical analyst, Angel Broking.

Analysts said buying is seen in software shares in the run-up to the April-June earnings season, which could start with Infosys Technologies in the second week of July.

"Till results, IT stocks will remain steady, but may fluctuate once results are announced," said an analyst from a domestic brokerage.

Dealers are mixed on the likely earnings of IT companies in the April-June quarter.

While some see boost to margins from the depreciating rupee, others expect earnings growth to slow down, which is usual this quarter.

Most companies are likely to face pressure from rising wage costs and stagnant order book, analysts said noting that order books start swelling from July-October quarter.

The near 3.5 per cent fall in rupee since March 31 could, however, augur well for the sector, dealers said. Friday, the rupee closed at 46.20 against the dollar, down from 46.01 Thursday.

Most traders could eye the Federal Reserve's move on interest rates for cues on the currency markets.

The dollar has been rising on expectations that Fed will again raise interest rates at its June 28-29 meeting. The Fed has been raising interest rates steadily in the last two years.

Infosys and Tata Consultancy Services are seen rising to Rs 3,075 and Rs 1,075 this week.

Analysts are placing bets on shares of mid-sized IT companies for their attractive valuations.

MRO-TEK is expected to rise to Rs 85-90, while Satyam Computer is likely to rise by Rs 30-80 to over Rs 730, analysts said.

Rolta India, which was last at Rs 152.05, is like to trade at 15 times FY07 earnings, against 12 times now. Mid-cap shares trade at 10-15 times 2006-07 estimated earnings, while large-cap shares are at 20 times FY07 earnings.