The share prices of domestic information technology (IT) companies rose sharply today on the back of an unexpected quarterly guidance by industry leader Infosys Technologies.
While the Bombay Stock Exchange (BSE) Sensex fell marginally by 0.17 per cent, the BSE IT index rose over three per cent. Infosys was the top gainer, up 3.69 per cent to close at Rs 2,782.
Software giant Infosys reported a marginal decline in its fourth-quarter net profit but forecast a robust revenue growth of 16-18 per cent this year starting April 1, lifting its shares. The company's results and outlook are widely regarded as an indicator of the sector's performance. Industry peers Tata Consultancy Services rose 2.8 per cent to close at Rs 819 and Wipro rose 2.45 per cent to close at Rs 719.80.
Analysts are of the view that while earnings of IT companies may take a hit due to rupee appreciation, majority of large institutions were underweight on the sector and buying in the counter will support the stock price.
“Large funds are likely to increase their holding in IT companies. While IT stocks may not get re-rated positively due to rupee appreciation, the sector will have tremendous volume growth and earnings may remain robust as global technology spending was improving,” said Tarun Sisodia, head of research at the Mumbai-based Anand Rathi Securities.
Sisodia believes there will be a near 10-15 per cent upside in some of the large-cap IT stocks within the next few months because the currency appreciation might not immediately impact the profits of IT companies.
