Street logs out of IT

MMTC ousts Infy from top 10 m-cap club.

An unfavourable business environment owing to a buoyant rupee has taken the sheen off information technology stocks. Reflecting the underlying market sentiment, industry bellwether "" Infosys Technologies "" on Tuesday was ousted by the state-owned metal giant, MMTC, from the Top 10 market capitalisation list.

The m-cap list, which featured Infosys for nine years (since 1999), on Tuesday does not figure a single IT stock. 

DETHRONED
Name	M-cap in Rs crore
	Oct 15, '07	Oct 16, '07
Reliance Ind	3,71,252	3,69,043
ONGC	2,54,742	2,51,587
Bharti Airtel	2,13,824	2,10,608
NTPC	1,87,008	1,90,677
DLF	1,52,882	1,56,599
Reliance Comm	1,53,899	1,55,524
ICICI Bank	1,21,952	1,28,629
NMDC	1,13,017	1,18,667
BHEL	1,18,111	1,17,274
MMTC	1,07,286	1,12,650
Infosys Tech	1,10,325	1,06,864

Compare this with the technology boom in 2000, where six stocks figured in the list. In 2006, the number fell to three "" Infosys Technologies, Tata Consultancy Services and Wipro.

On Tuesday, MMTC replaced Infosys with a market capitalisation of Rs 112,650 crore, as the stock went up by 5 per cent. Infosys was the largest loser among Sensex stocks. It fell by 3.14 per cent to Rs 1,868.25. As a result, its market capitalisation plummeted by Rs 3,461 crore to Rs 106,714 crore on the BSE.

The decline in net profit growth rate owing to the rupee appreciation has been the culprit behind the re-rating of technology stocks.

The net profit growth rate of the sector almost halved from 90 per cent in FY2000 to 40 per in FY2007. The rupee has appreciated almost 20 per cent "" from Rs 49.05 in May 2002 to Rs 39.38 in October 2007.

Infosys Technologies, which recorded an over 100 per cent growth in net profit till FY2001, reported a 56 per cent growth in 2006-07.

The company posted a 26 per cent rise in the first half of FY08. And even though the Sensex is hitting new highs everyday, the BSE IT Index has discounted 47 per cent from its lifetime high of 8,678, seen in February 2000.

The IT index is the largest loser, falling 1.77 per cent (83.34 points) to close at 4,629.09 on Tuesday compared with the marginal 6.81 points drop in the Sensex.

The IT sector, which accounted for 24 per cent share of the total market capitalisation of the BSE, declined to 12 per cent in 2006 and, currently, stands below 10 per cent at 6.79 per cent.

Reliance Industries, Oil and Natural Gas Corporation, Bharti Airtel, DLF, ICICI Bank, and BHEL are the others in the Top 10 club.