Software major NIIT is expected to witness profit-taking following the announcement of a bonus issue by the company.
The stock closed at Rs 1,228 on the Bombay Stock Exchange (BSE) and Rs 1,248.75 on the National Stock Exchange (NSE) last Friday. It had ended at Rs 1,285.50 on October 9 on the Bombay Stock Exchange.
Brokers say that the counter has witnessed speculative purchases which may be squared up by Tuesday.
"Operators had built up positions in NIIT anticipating good results. However, after the company announced a 1:2 bonus, it is likely that those who expected a 1:1 bonus may square up their positions," a dealer at a leading institutional brokerage said.
He also said that the outstanding quantity on Friday during the badla trading was 1,62,700 shares. The outstanding purchase position was 1,56,500 shares, while the sale position was 57,000 shares.
"The outstanding position and the badla rate for the weekend on the BSE indicates that the market is bullish on the counter. However, most of the long positions are a speculative build up," the dealer added.
The stock witnessed selling from leading foreign institutional investors. Brokers said that Commonwealth Development Corporation offloaded about 50,000 shares at the counter.
"There are certain foreign funds that entered the stock at lower levels. The market is witnessing some profit booking as foreign as well as domestic funds churned their respective portfolios," a fund manager at a leading domestic mutual fund said.
NIIT announced a 1:2 bonus on Wednesday. The company's net profit was pegged at Rs 108.4 crore against the net profit of Rs 67.9 crore posted last year.
The company's international revenues grew by 74 per cent to touch Rs 312 crore. The software business recorded revenues of Rs 271.2 crore, and the training business grew to touch Rs 256.5 crore.
According to analysts, the company is planning to expand its operations in US through acquisitions.
According to company sources, NIIT is also planning to focus on European operations.
The NIIT scrip was recently added to the BSE Sensex and the S&P CNX Nifty index.
Brokers say that the company's stock is liquid, and has a market capitalisation of more than Rs 300 crore.
Analysts also say that the implementation of the economic value added system helped the company reduce its interest costs by 36 per cent to Rs 10.7 crore from Rs 16.7 crore in 1996.97.
