IT Stocks - beneficiary of $ appreciation

Information technology (IT) stocks, which had underperformed the broader markets until mid-September, are now back in favour. Since 12 September, the CNX IT index of the National Stock Exchange has outperformed the benchmark Nifty by nearly 20%, more than making up for its underperformance earlier in the year.

Needless to say, this is because of the sharp depreciation of the rupee since August. It closed at 52.73 against the dollar on Tuesday, nearly 20% higher compared with levels of around 44 in early August.

According to an analyst with a foreign brokerage firm, every Rs. 1 increase in the rupee to dollar rate leads to an increase of around 3.5% in earnings for Infosys Ltd. The increase in earnings will be lower for firms such as Tata Consultancy Services Ltd, since they have hedged to a much higher extent. Even if one were to assume that the rupee to dollar rate in the medium term will average 50, this will lead to an over 20% increase in earnings estimates for Infosys compared with August.

Besides, the sharp rise in the rupee will provide a large margin buffer for IT companies, which will not only offset the pressure of wage inflation, but also companies’ leeway to spend more on sales and marketing to generate demand.

This is a welcome relief for companies in the sector as well as investors. In fact, a number of importer firms as well as companies with unhedged foreign currency borrowings are reeling under the pressure of a falling rupee. Given the widening trade deficit and the drop in portfolio and capital flows into the country, the fall in the rupee is expected to continue. In this backdrop, IT stocks may continue to outperform the broader markets.

Of course, the rise will be limited, given the weakening global macroeconomic situation. Infosys’ chief financial officer said on Monday that the company may miss the upper-end of its sales target for the December quarter and the fiscal year because of a deterioration in the global economic environment.

Even so, IT firms seem much better placed compared with firms catering to the domestic economy, which are grappling with high inflation, high interest rates as well as the impact of a declining rupee on their imports and borrowings.

Our Advise

Large Caps - Build your portfolio - hold long term

1. Infosys - Monthly High Rs.2875 and Low of Rs.2487 - Buy around 2500 on dips
2. HCL Tech - Monthly High Rs.380 and Low of Rs.450 - Buy around 400 on dips
3. Wipro - Monthly High Rs.387 and Low of Rs.327 - Buy around 350 on dips
4. TCS - Monthly High Rs.1040 and Low of Rs.1132 - Buy around 1060 on dips
5. Tech Mahindra - Monthly High Rs.640 and Low of Rs.543 - Buy around 550 on dips

Small Caps - Purely Trading bets - hold short term

1. Onmobile Monthly High Rs.640 and Low of Rs.543 - Buy around 550 on dips
2. Educomp Monthly High Rs.280 and Low of Rs.175 - Buy around 170 on dips
3. Mahindra Satyam Monthly High Rs.76 and Low of Rs.64 - Buy around 65 on dips
4. Mindtree Monthly High Rs.380 and Low of Rs.420 - Buy around 400 on dips
5. Patni Monthly High Rs.444 and Low of Rs.343 - Buy around 380 on dips

Source Livemint.com

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TCS - Fundamental Pick - Buy

The shares of the country's largest IT services firm have witnessed a sell-off recently due to fears of a possible double-dip recession in the US and Europe. However, these concerns seem to be overblown as the company has seen a healthy flow of deals from these regions.

In the previous quarter, the software giant clocked 10 new deals across geographies (led by US & Europe, followed by emerging markets) and registered a robust growth across verticals (hi-tech, telecom, retail, BFSI). The company management expects the demand environment and pricing to remain stable in the coming quarters. Given the volume growth, improvement in productivity and high utilisation levels, TCS is likely to outperform its peers in the industry for the rest of the year.

The management's positive growth outlook is also reflected in its hiring trend. After recruiting around 12,000 people in the first quarter of 2011-12, the company (largest private sector employer) is likely to meet its target of 60,000 people for the entire fiscal year. The company has also planned a capital expenditure of Rs 2,300 crore for 2011-12 to help increase its market share in Latin America, the Middle East and Asia.



Performance :

the stock has corrected sharply since the last 1 month and any recovery will depend on the signs of higher IT spend and US economy showing signs of buoyancy.

Time Span	Price	Change	%Change
Today	1,006.50	57.35	6.04
Week	929.80	19.35	2.08
Month	1,146.05	-196.90	-17.18
Three Months	1,141.45	-192.30	-16.84
Six Months	1,111.20	-162.05	-14.58
One Year	874.10	75.05	8.58

Keep away from this stock. Any sharp declines to the levels of Rs.800 should be taken as an opportunity to add to ones portfolio and hold for 2-3 years time frame for a target price of Rs.1500/-

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Indian IT Sector

Shares of big IT companies fell sharply in trade after the US credit rating was downgraded by S&P on Friday. All the three top IT companies, TCS, Wipro and Infosys, witnessed a huge fall in their share prices on the BSE as these companies earn a major chunk of ther revenue from US and Europe.

"One should buy TCS or Infosys because I do not think business will be impacted so much in the short run, while the long tern story remains intact", says Raamdeo Agrawal, Director and Co-Founder, Motilal Oswal Financial Services in an interview with ET Now.

The US and Europe are the two biggest markets for Indian IT firms. TCS, Infosys and Wipro rely on the US and European markets for about 60 per cent of their revenue. Any slowdown there could straight away affect domestic IT companies having their presence globally.

While most IT companies have expressed caution in the past few months post their quarterly results in the wake of ongoing European debt crisis and high unemployment in the US. However they remain confident of being able to maintain their growth momentum

"On evaluation of IT companies and some of the frontline majors, their business prospects, business model and the possibility of getting new business remain robust and I find that fundamentally things have not changed as much", says Deven Choksey, MD, KR Choksey Securities in an interview with ET Now.

"The valuation of these companies have stayed around 20 plus price earning ratio which has started to come down more because the funds which invested into these particular companies are the trading funds or the index funds and they started pulling out money because of the want of money back home", said Deven.

"However, in comparison to other markets and stocks where the valuations has become far too attractive, shares in IT companies are still reasonably priced", says Deven. "Fundamentally things are not looking as negative as it is being feared about with the fall in the prices of IT companies", Deven further added.

Leading players like TCS and HCL Technologies have posted stellar growth numbers in the past few quarters on the back of steady demand for outsourcing services.

Our Recommendation :

Long term investors should buy TCS around 950 levels, Wipro @ 325, HCL Tech @ 400 levels. The July - Sept Quarter results should be good and hence one can hold for a 15% return in next 2-3 months

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TCS - Buy on declines

Tata Consultancy Services Limited (TCS) is an Indian IT services, business solutions and outsourcing company headquartered in Mumbai, India. It is the largest provider of information technology in Asia and second largest provider of business process outsourcing services in India.

TCS, a Tata group company (74 per cent shareholding) is the largest software services exporter from India. It is a global technology services company that provides end-to-end business solutions to its clients.

TCS offers a consulting-led, integrated portfolio of IT and IT-enabled services delivered through a Global Network Delivery Model, recognised as the benchmark of excellence in software development. Along with its subsidiaries, TCS operates in 55 countries with over 1,60,000 employees.

TCS has performed robustly in all its parameters over the last six years. Its impressive fundamentals in the past form a strong base for its future.

TCS has registered an impressive 5 year Net Sales CAGR of 23.4 per cent; this has been a result of high repeat business (95 per cent+) from existing clientele and at the same time continuously increasing new clientele base.

Also, the company has managed to clock a consistent growth in profits, registering a robust 5 year EPS CAGR of 21.9 per cent. TCS has a great past and with its last few quarters performance, it has proved that it has the ability to be a winner, even in tough times.

TCS is India's largest IT company and one of the strongest brands. In the recent past it has outperformed its peers in terms of registering great financial performance. Its ability to generate repeat business from its strong client base and strategic acquisitions have been its major growth driver till today & with our ever-increasing dependence on technology solutions, a company like TCS is poised for good growth in the future.

The company has given decent returns to the investors

Time Span	Price	Change	%Change
Today	1,122.65	-9.35	-0.82
Week	1,150.90	-18.90	-1.64
Month	1,069.55	62.45	5.83
Three Months	1,191.65	-59.65	-5.00
Six Months	1,212.60	-80.60	-6.64
One Year	827.40	304.60	36.81

Over a years time span the scrip gave a super returns of 36.81%. Though in the near term it could test 1100 levels buy on steep declines for a target of 1450

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TCS Buy

Tata Consultancy Services (TCS) could not have delivered a better quarter than this one, every time superseding the earlier threshold. Q2FY11 has been an almost perfect quarter with no blemishes. “Profitable growth” has been the key theme that TCS delivers from this strong set of numbers, coming on top of an already strong Q1FY11. The company has done well on many parameters--handsome revenue and margin performance, volume growth of 11% QoQ, eight large deal wins spread across sectors, highest ever organic gross/net employee addition of 19,293/10,717, sequential growth of 10% plus across verticals & most clients, and most importantly, Ebitda (earnings before interest, taxes,depreciation and amortisation) margin improvement by 70 bps to 30% (historic high).

We see upgrade in consensus EPS (earnings per share) numbers for TCS, despite the appreciating rupee. We are revising up our EPS by 4% for FY11 and 6% for FY12 to Rs 42.6 and Rs 48.4, respectively. Also, the CEO remarked about the likely increase in IT budgets for the next fiscal based on preliminary discussions with a small set of clients. “Growth agenda” and “being efficient” are key themes driving the IT spending at client organisations in the current environment.

We see that the most impressive part of TCS’ performance over the past 4-6 quarters is its ability to rigourously close the margin gap with Infosys. TCS’ Ebit (earnings before interest and taxes) margin has expanded over 300 bps (basis points) since the start of the last fiscal. At the same time, we see advantages such as market diversity (horizontals), geographic diversity, end-to-end service offerings, and ability to bag large, bundled deals among others playing in harmony currently.

At CMP (current market price) of Rs 986, the stock is trading at a P/E (price-to-earnings) of 23.2x and 20.4x for FY11e and FY12e earnings, respectively. With consistent outperformance on revenues (QoQ) and strong margins, we see TCS’ valuations improving further and possibly entering the premium zone to that of Infosys. We maintain Buy on the stock and rate it ‘Sector Outperformer’ on relative returns.

TCS' revenues, at Rs 92.9 bn, jumped 13.0% QoQ and 25% YoY. In dollar terms, revenues grew 11.7% to $2,004 m. In constant currency terms, the company delivered 11% sequential growth. Gross profit for the quarter stood at Rs 43.4 bn, up 13.7% QoQ. Gross margin was flat at 46.8%. The company’s operating margin (Ebit) increased further by 86 bps QoQ and now stands at 28.0% TCS reported net income of Rs 21.1 bn, up 14.2% QoQ. Net profit margin now stands at 22.7% versus 22.4% in the previous quarter.

The company won eight large deals during the current quarter in addition to ten in the previous quarter, compared to nine deals by Infosys in H1.

India led the growth with 25.7% sequential growth in dollar terms. Continental Europe too saw a turnaround with 14.2% QoQ growth after lacklustre performance for the past two quarters.

All the verticals have reported a double-digit sequential growth. This is the second consecutive quarter where all the verticals have reported QoQ growth. Note that even manufacturing has shown a strong growth of 11.7% QoQ in dollar terms.

Growth momentum across horizontals continued with all showing sequential growth. Four verticals, namely business intelligence, enterprise solutions, assurance services and infrastructure services, reported more than 15% QoQ growth. TCS added 30 new clients (36 in Q1) during the quarter versus 27 for Infosys. The active clients count stood at 936 versus 930 in the previous quarter.

The number of $1 m clients increased by 11 to 420; there was an increase in the $5 m (1), $10 m (9), $20 m (1), $50 m (1) and $100 m (1) client bracket, over the previous quarter.

—Edelweiss

OUR RECOMMENDATION :

The scrip is finding good support around 950 levels and is likey to face resistance around 1200 levels. Buy on declines and hold for long term

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IT Sector - Outperform - Buy on dips

Mumbai: The September quarter results of India’s top four information technology (IT) outsourcing companies underscores the fact that demand for IT services is extremely strong. Cumulative revenues of Tata Consultancy Services Ltd (TCS), Infosys Technologies Ltd, Wipro Ltd’s IT services division and HCL Technologies Ltd rose by 10.3% quarter-on-quarter (q-o-q) to Rs. 25,688.6 crore.

But in the current demand environment, achieving high growth isn’t particularly difficult. It’s more important to assess how well India’s top IT firms have managed this growth spurt—in terms of employee resources and margins, and cash flow management.

Ahmed Raza Khan/Mint

Growth would have been higher at close to 12%, but for the relatively low growth reported by Wipro on Friday. Wipro’s volume growth was decent at 6.6% and compares reasonably well with Infosys’ 7.2% volume growth. But pricing was lower in constant currency terms and while its peers gained from the depreciation in the rupee last quarter, Wipro took a hit on account of its large forex hedge position. As a result, revenue grew by just 4.5% in rupee terms. For about a year-and-a-half now, Wipro’s revenue growth has been in the bottom end of the growth range of the top IT companies. It’s not surprising that Wipro’s shares have fallen by over 8% since the beginning of the current results season, much more than the 2.5% fall in the National Stock Exchange’s CNX IT index. While Wipro was at the bottom of the pile in terms of revenue growth, TCS led with an impressive 13% revenue growth. The firm’s volume growth of 11.2% was also the highest in the sector, and far higher than HCL Tech’s 7.9% volume growth and Infosys’ growth of 7.2%.

Also Read | Girish Paranjpe | Good quarter, but we could have done better

From an industry perspective, the important thing is that all top companies have grown volumes at a healthy rate. As one analyst from a foreign brokerage points out: “The nature of demand is extremely healthy, and growth isn’t merely being driven by pent up demand in the system. Clients are handing out work related to compliance, risk management, consolidation of ERP (enterprise resource planning) systems and supply chain integration.” Wipro, which is fairly accurate with its quarterly guidance estimates, has said that it expects revenue to grow by 3.5-5.5% in the December quarter. Assuming its peers are able to continue growing at a faster pace, industry growth is likely to be high even in Q3.

How well have India’s top firms managed this growth phase? While each of the top four firms have grown volumes at a decent pace, their ability to manage employee resources, margins and cash flows have differed substantially. Analysts at CLSA Asia-Pacific Markets point out in a note to clients, “Credit is due to TCS in manpower management, which has been the best in the industry. TCS has also faced industrywide headwinds of wage inflation. However, unlike Wipro, which cut manpower extremely aggressively in the slowdown, and Infosys, which reorganized its manpower through iRACE, TCS has been much more considerate to its employees. This is reflected in the much lower attrition, which has helped TCS service the demand upswing much better. This has also limited sub-contractor usage driving margin upsides.”

Attrition levels at Wipro and Infosys have been relatively high and the latter had to resort to high use of sub-contractors to meet the surge in demand last quarter. Besides, the latter has had to resort to out-of-turn promotions, while Wipro and HCL Tech have issued much higher number of options to employees below market price. The resultant increase in employee costs for these firms has impacted margins. As the chart shows, TCS and Infosys reported a strong growth in earnings before interest and tax, while earnings of Wipro and HCL Tech fell considerably. But note here that Infosys’ margins had fallen sharply in the June quarter and margins were expected to bounce back in the September quarter. Of the four firms, only TCS’ earnings have been meaningfully higher than Street expectations. TCS, however, benefitted from a one-off gain, thanks to which its rent costs fell by 46% q-o-q. But for this gain, margins would have been flat. Still, this doesn’t take away from the fact that the firm has managed its employee resources and margins relatively well.

Incidentally, TCS shares have risen by over 5% since the beginning of the results season last week, making it the only company among the top-tier firms to witness a rise in share price. Infosys and HCL Tech’s shares have fallen between 4% and 5%.

Despite the iRACE fiasco, Infosys’ performance on the margin front has been relatively good too. But Wipro and HCL have clearly disappointed as far as margins go, with the latter’s profit margins at their lowest levels in the last 12 years.

A similar difference is reflected in the cash flow generated by these firms. Here, Infosys leads the pack, with a free cash flow (FCF) of Rs.1,273 crore in the September quarter, which works out to an impressive 18% of its revenue. TCS isn’t far behind with an FCF/revenue ratio of around 15% last quarter. But Wipro’s FCF amounted to just 5.5% of revenue last quarter and HCL Tech reported a negative FCF. CLSA’s analysts note, “Such low margins and an inferior cash flow profile are a reflection of HCL’s strategy to trade growth for margins/earnings quality and recovering these will remain a challenge for HCL.”

In sum, growth in the current environment is almost a given for top IT firms. But not all Indian firms are managing this growth phase well.

mobis.p@livemint.com

Sridhar Chari in Bangalore and Surabhi Agarwal in New Delhi contributed to this story.

Source : Livemint.com

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Buy TCS on dips

TCS is one of the world’s leading information technology companies and is well poised to take advantage of the amazing business opportunity in outsourcing which is set to emerge as the leading companies of the world reorganize themselves after the financial crisis of 2008. It has around 90 clients the world over and has been showing good performance over the years.

“TCS will also benefit from the diversity of its business operations. It has reported better than expected volume and profit growth in the recent quarters. We recommend buying TCS as the stock trades around 20 times FY10E, which is a 15 – 20% discount to the valuation of Infosys,” says Kapur.

OUR RECOMMENDATION :

TCS has had a dream run in the last 2 months from a low of 450 it has scaled 680 a 52 week high recently. Avoid in the short term and buy below 600 for a target price of 900 in a years time frame.

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IT sector - Overview of Performance

Dear All,

Is it the right time to enter the IT sector and make investments ?

At the outset the First Quarter 09-10 numbers are good enough it does not give a picture of getting of woods. The US economic woes continue to haunt Indian IT firms.

Infosys :

India's largest IT firm by sales Infosys shot up 2.75%. The government has launched a Government-to-Business (G2B) services e-biz project with Infosys as the technology partner. The project is among the 27 Central, State and Integrated Mission Mode Projects (MMPs) under the National E-Governance Plan (NEGP).

Wipro :

India's third largest IT exporter by sales Wipro advanced 0.99% after consolidated net profit as per Indian accounting rules rose 0.54% to Rs 1015.50 crore on 2.5% fall in sales to Rs 6289.10 crore in Q1 June 2009 over Q4 March 2009. The company announced the results before trading hours on Wednesday, 22 July 2009.

TCS :

India's largest IT exporter by sales TCS gained 2.19% after net profit rose 15.27% to Rs 1276.44 crore on 0.12% fall in sales to Rs 5609.60 crore in Q1 June 2009 over Q4 March 2009. The company announced the result after trading hours on 17 July 2009.

Tech Mahindra :

Tech Mahindra rose 1.95% even as net profit dropped 43% to Rs 131.6 crore on 6% rise in total revenues to Rs 1,113 crore in Q1 June 2009 over Q4 March 2009. The company attributed fall in net profit to surge in interest costs on debt it took to buy Mahindra Satyam, the erstwhile Satyam Computer Services. The results were declared after market hours on Wednesday, 22 July 2009. Shares of Mahindra Satyam surged 15.09% to Rs 104.90

Buy on dips IT shares for long term for a 15-20% return

Raghav

Chief Investment Officer

Intelligent Investor -

Ravina Consulting

Bangalore -India

TA- Tech Mahindra, TNPL, Essar Oil, Central Bank, DCB, Graphite, TCS, KSB Pumps, NBVenture

Please let me know the outlook for Tech Mahindra. V V Ravi Kumar

Tech Mahindra (Rs 280.6): The steep decline in the last quarter of 2008 halted at Rs 216 and the stock has been moving in a range between Rs 200 and Rs 320 since this trough.

Tech Mahindra tested the support at Rs 200 in January 2009 as well and is currently in a short-term up-trend. Immediate resistance for the stock is around Rs 300 and failure to breach this level will result in the continuation of the sideways move in the range indicated above.

However, a breach of the upper boundary will give the targets of Rs 437 or Rs 586 over the next 12 months.

Investors with a shortterm perspective can hold the stock with a stop at Rs 235. Long-term investors can hold with a deeper stop at Rs 180.

This stock can be accumulated as it moves close to Rs 200 with the same stop.

Investors should however bear in mind that the longterm trend in the stock is down and the risk of further decline in the long-term remains open. Therefore fresh purchases are not recommended on a close below Rs 180.

I am holding 2000 shares of Tamil-Nadu Newsprint purchased at Rs 90. Should I hold the stock or buy more or exit at current level? Anuj Jain

TNPL (Rs 59.7): TNPL was in a structural bull-market from August 1998 to January 2008. Though the long-term trend is down since the beginning of 2008, the stock is pausing at the key long-term support at Rs 60. A long-term trough is possible in the area between Rs 50 and Rs 60. Investors can therefore hold the stock as long as it does not record a weekly close below Rs 50.

Short-term resistances for the stock are at Rs 65 and Rs 75. But a rally to Rs 84 is possible over the next couple of years.

I have purchased Essar Oil at Rs 94. What is the prospect for this stock? P S Rajesh

Essar Oil (Rs 80.3): Essar Oil recorded a dizzying rally from Rs 50 to Rs 333 in the last three months of 2007 when the bull-market frenzy was at a crescendo. The un-sustainability of such up-moves was amply demonstrated in the fact that the stock was back at Rs 54 in October 2008. The stock is moving in a range between Rs 60 and Rs 100 since the Rs 54-trough. This range can continue to shackle the stock over the next few months and we do not envisage a move beyond Rs 130 over the next 12 months.

Support below Rs 50 is at Rs 40. The long-term floor for the stock could be in the band between Rs 30 and Rs 60.

I have purchased Central Bank at Rs 45 and Development Credit Bank at Rs 35. Can I buy more of these stocks at current levels or wait for further correction? Sudheer Shanbhag

Central Bank (Rs 36.7): This stock declined below the 2008 low at Rs 32 to form a new low at Rs 29.7 on March 9. Though the stock has gained over 20 per cent from this trough, it needs to rally further to make the near-term and medium-term view positive.

Short-term resistances for the stock are at Rs 41 and Rs 50. Investors with a shorter investment horizon can sell the stock around the Rs 50 level. Fresh purchases are however advised only on a close above Rs 54.

Development Credit Bank (Rs 22.0): This stock fell way below its listing price of Rs 35 to bottom at Rs 13.5 on March 6. A sustainable bottom appears to have been formed at this level since the stock has moved strongly above the intermediate term trend-line as well as the 50- day moving average.

Next resistance for the stock is around Rs 25. Once this level is cleared, DCB can head towards Rs 36 over the next one year. Investors can hold the stock with a stop at Rs 17.5 and try to book profits at the levels mentioned above.

I have 2000 shares of Graphite India purchased at Rs 23. What is the outlook on this stock?Kanduri Venkata Ramakrishna

Graphite India (Rs 26.1): This stock is attempting to reverse from the trough at Rs 20 formed in March. The recovery this far is not convincing and Graphite India can face resistance at Rs 27 and then Rs 31 in the nearterm.

Investors with a shortterm perspective should exit the stock on reversal from either of these levels.

Inability to move past these resistances would indicate that the stock can head lower towards the next long-term support at Rs 15. Mediumterm view on Graphite India will turn positive only on a close above Rs 39.

Let me know the best price at which to buy Tata Consultancy Services. J Rajagopalan

TCS (Rs 578.5): TCS made a life-time low at Rs 418 in October 2008 and has been moving sideways in the band between Rs 450 and Rs 600 since then.

It is not yet certain if a sustainable trough has been formed last October since sideways move of this kind can be followed by another leg of the decline.

Therefore only investors who have a high risk-appetite can take exposure to this stock close to Rs 450 with a tight stop at Rs 400. In other words, fresh purchases are not recommended on a close below Rs 400. Else, wait for a weekly close above Rs 600 before buying the stock.

Next medium-term target for the stock would be Rs 800. Movement between Rs 400 and Rs 800 is the likely range for the next 12 months.

Please advise whether I can purchaseKSB Pumps Ltd at current levels. Rohit

KSB Pumps (Rs 255.5): The long-term trend in KSB Pumps is down. But the stock is currently trying to stabilize around Rs 170. A rangebound move between Rs 175 and Rs 275 is apparent over the last five-months. Immediate resistance for the stock is at Rs 286. Wait for a close above this level before buying the stock. Another option would be to wait for a correction to the zone between Rs 200 and Rs 220 to buy with a stop at Rs 170.

Fresh purchases should be avoided on a close below Rs 170 since the next support for the stock is at Rs 140 and Rs 90.

Please discuss the prospects of Hanung Toys and Nava Bharat Ventures. Ramana Sarma

Hanung Toys (Rs 36.2): Hanung Toys recorded a lifetime low at Rs 24 in January 2009 and is currently consolidating in the band between Rs 24 and Rs 40.

The risk of the stock declining further to a new low remains as long as it trades below Rs 53. A close above this level would be the first indication that a sustainable recovery is underway. Investors with a short term perspective can sell the stock on rallies to Rs 42 or Rs 48.

Nava Bharat Ventures (Rs 138.8): This stock is reversing from the long-term support at Rs 90. The chart pattern since the November 2008 trough is positive and implies that a long-term bottom could have been formed at Rs 90 in November 2008.

However, the stock needs to cover a lot more ground before the medium-term view turns positive. Key mediumterm resistance is in the band between Rs 160 and Rs 180.

Investors with a lower investment horizon can divest their holding in this band. Stop loss for long-term investors can be at Rs 85.

- Lokeshwarri S.K.

businessline 06-03-09

IT shares slid on BSE / NSE on dashed budget hopes !

Shares of five information technology firms fell by 1.78% to 3.59% as some anticipated tax sops for the IT sector were not announced in the interim general budget.

External Affairs Minister Pranab Mukherjee, currently in charge of the finance ministry, presented the interim budget today, 16 February 2009.
At 14:04 IST, the BSE IT index was down 2.72% at 2,114.53. It, however, outperformed the Sensex, which was down 3.29% at 9,317.41.
TCS (down 1.78%), Infosys Technologies (down 2.69%), Wipro (down 2.88%), HCL Technologies (down 3.68%), and Hexaware Technologies (down 3.59%), slipped.
The information technology (IT) and information technology enabled services (ITeS) industry had anticipated the interim budget will extend the Software Technology Park of India (STPI) scheme beyond 2010. But there was no such announcement
Units situated in software technology parks falling under the scheme's umbrella are eligible for a 10-year income tax holiday, in addition to other benefits.
India's largely export-oriented software sector's fast pace of growth has been crimped by the economic slowdown in the US, which accounts for more than half of the sector's export revenues.
Earlier this month, the National Association of Software and Services Companies (Nasscom) slashed its software and services export target for the year ending March 2009 to about $47 billion, a growth of 16-17% and slower from an earlier target of 21-24%.

Market Wrap for week ending

It was a good week for the Indian market that showed resilience and held its own amidst its global peers. On the domestic front, good IIP numbers and lower inflation figures kept the market in a positive frame. While the market goes into next week with a positive bias, experts are not convinced there is more steam left for the market to go up. This week's good figures are: Sensex up 3.5% and Nifty up 3.7%. BSE Midcap index up 4.5%, BSE Smallcap index up 3.5% over the week. BSE Realty index up 13%, BSE Consumer Goods index up 7.7%, BSE Auto index up 6.5%, BSE Bankex index up 5.5%, BSE Metal index up 3.5% and BSE Oil & Gas index up 3%.  

Positive global cues saw the Indian market close higher today. There was some profit booking in last hour of trade. Experts felt the market did not have any major expectations from the interim rail budget and thus almost ignored the event today. They added that the market could see a sell off on Monday due to the vote on account and interim budget. Sensex shut shop at 9634, up 168 points and Nifty at 2948, up 55 points from the previous close. CNX Midcap index was up 1.65% and BSE Smallcap index was up 0.62%. The market breadth was positive with advances at 771 against declines of 417 on the NSE. Top Nifty gainers included Mahindra & Mahindra, Idea and Reliance Communications while losers included Sun Pharma, GAIL and ABB. 

One can expect a global rally in the next two months, feels Amitabh Chakraborty of Religare Securities, on CNBC TV18. The market could see a selloff on Monday on account of the interim budget, he says. But Nifty could possibly go to 3500 till the elections, he adds. 

The market may see a sell off on Monday if there are negative surprises in the interim budget, says Gaurang Shah of Geojit Financials, on NDTV Profit. It would be a good time to book profits across the board, he adds.  

The acid test for the market is likely to be 3100, feels E Mathew, technical analyst, on CNBC TV18. It is to be seen if Nifty can convincingly cross that level or peter out, he says. If Nifty can cross 3100 then levels of 3482 and 3500 is what one can expect, he adds. 

Hold Reliance Communications with a target price of Rs 200 where one can book profits and exit the stock, says Ashwani Gujral, technical analyst, on CNBC Awaaz. The stock has support at Rs 160 and is currently trading at Rs 181, up 5.3% on the BSE.  

Hold Sesa Goa with a target price of Rs 120 in 2 months, says Salil Sharma of Kapoor & Sharma Company, on CNBC Awaaz. The stock is currently trading at Rs 95, up 2.08% on the BSE.  

Hold Bharti Airtel with a target price of Rs 750 where one can book profits and exit the stock, says Ashwani Gujral, technical analyst, on CNBC Awaaz. The stock is currently trading at Rs 652, up 0.26% on the BSE. 

Hold Dish TV with a target price of Rs 30-32 where one can book profits and exit the stock, says E Mathew, technical analyst, on CNBC TV18. The stock is currently trading at Rs 27, up 16% on the BSE. 

Hold Idea Cellular with a target price of Rs 58 where one can book profits and exit the stock, says Ashwani Gujral, technical analyst, on CNBC Awaaz. The stock has support at Rs 33 and is currently trading at Rs 51, up 5.2% on the BSE.  

Hold Idea Cellular with a target price of Rs 56-60 where one can book profits and exit the stock, says VK Sharma of Anagram Stock Broking, on Zee Business. The stock is currently trading at Rs 51, up 5.2% on the BSE.

 If Nifty is able to sustain above 2950 then it could see an upmove to 3050, says Atul Badkar of Edelweiss, on CNBC TV18. It would be good to book profits at higher levels, he adds.  

It was a good day for the market that closed higher thanks to positive global cues. Sensex closed at 9617, up 151 points (provisional) and Nifty at 2948, up 55 points (provisional) from the previous close. CNX Midcap index was up 1.4% and BSE Smallcap index was up 0.82%. The market breadth was positive with advances at 771 against declines of 417 on the NSE.  

Hold all Nifty long positions with a target of 3050-3075 and stop loss of 2840, says E Mathew, technical analyst, on CNBC TV18, as closing market strategy. 

Book 50% profits on long positions and hold the rest with Nifty target of 3050, says Anil Maghnani, on CNBC TV18, as closing market strategy.

Hold Nifty long positions, says Deepak Mohoni, technical analyst, on CNBC TV18, as closing market strategy.

It is worthwhile to wait and watch which way the market is likely to go, says Sudarshan Sukhani, technical analyst, on CNBC-TV18. If Nifty is able to cross 2940 then it could rally another 100 points, he says. So stay long, he adds. 

If Nifty closes above 2930 then it could go up to 2960 which is a strong resistance level, says MB Singh, technical analyst, on Zee Business. If Nifty is able to cross 2960 then it would mark a short-term uptrend and Nifty could even rally another 150 points, he adds.  

Crnindia.com maintains a buy call on GMR Infrastructure with a target of Rs 88 and stop loss of Rs 73, reports CNBC Awaaz. The stock is currently trading at Rs 79, up 2.57% on the 

SMC Global Securities maintains a buy call on Alstom Projects with a target of Rs 340 and stop loss of Rs 268, reports CNBC Awaaz. The stock is currently trading at Rs 287, up 0.90% on the BSE. 

HEM Securities maintains a sell call on Ranbaxy with a target of Rs 192 and stop loss of Rs 222, reports CNBC Awaaz. The stock is currently trading at Rs 211, down 0.59% on the BSE.  

Sharekhan maintains a buy call on Bajaj Auto with a target of Rs 640, reports Zee Business. The stock is currently trading at Rs 484, up 1.25% on the BSE.  » Send to friends

Crnindia.com maintains a buy call on Ambuja Cements with a target of Rs 79 and stop loss of Rs 70, reports CNBC Awaaz. The stock is currently trading at Rs 73, down 0.20% on the BSE. 

Tata Steel continues to be in a range of Rs 165-Rs 220 and one can trade accordingly on the lower and upper side, says Ashwani Gujral, technical analyst, on CNBC TV18. The stock is currently trading at Rs 195, up 5.23% on the BSE. 

Buy Kalpataru Power and Lupin for the long term for good returns, says Jigar Shah of KIM ENG Securities, on CNBC TV18. Kalpataru Power is currently trading at Rs 277, up 4.4% and Lupin at Rs 638, up 0.23% on the BSE. 

Hold Nifty long with a stop loss of 2880, says Ashwani Gujral, technical analyst, on CNBC TV18. Nifty range is 2940-2960 and the market does not seem to have much fuel left to go up, he says. The market does not have much upside now, he adds.  

The European markets have opened in the positive. Positive global cues see the Indian market continue to trade firm. Sensex is trading at 9666, up 200 points and Nifty is at 2954, up 61 points from the previous close. CNX Midcap index is up 1.7% and BSE Smallcap index is up 1.11%. The market breadth is positive with advances at 868 against declines of 285 on the NSE. 

Buy Sterlite Technologies with a price target of Rs 120 in 12 months, says Jigar Shah of KIM ENG Securities, on CNBC TV18. The stock is currently trading at Rs 65, up 2.42% on the BSE.  

Angel Broking maintains a buy call on Petronet LNG with a target of Rs 80, reports Zee Business. The stock is currently trading at Rs 37, up 0.02% on the BSE.  

HEM Securities maintains a buy call on Titan Industries with a target of Rs 879 and stop loss of Rs 820, reports CNBC Awaaz. The stock is currently trading at Rs 857, up 0.42% on the BSE.

The economy is likely to see a significant slowdown in the second half of this year, says Tushar Poddar of Goldman Sachs, on CNBC TV18. Do not expect the IIP numbers to bounce back in January-March, he says. Exports may go down by 20%, he adds.  

Buy ABB close to Rs 435-420 with long-term view, says PK Agarwal of Bonanza Portfolio, on Zee Business. It has resistance at Rs 480, he adds. It will give good returns, he says. The stock is currently trading at Rs 448, down 1.6% on the BSE. 

Investors should stay away from Educomp Solutions, says Deepak Mohoni, technical analyst, on CNBC Awaaz. There is downside volatility in the stock and overnight risk is too much, he adds. The stock is currently trading at Rs 2051.50, up 4.9% on the BSE. 

Buy MRPL with target of Rs 46, says Ashwani Gujral, technical analyst, on CNBC Awaaz. Keep stop loss of Rs 37, he adds. The stock is currently trading at Rs 40.90, up 0.4% on the BSE.  

Hold Power Grid with stop loss of Rs 80, says PK Agarwal of Bonanza Portfolio, on Zee Business. It can go up to Rs 140, he adds. The stock is currently trading at Rs 93.70, up 3.1% on the BSE.  

I am negative on IT space, says Vibhav Kapur of IL&FS Investmart on CNBC TV18. Indications are that IT spending will be cut and there is a lot of pricing pressure, he adds.

Hold IDFC with stop loss of Rs 50, says PK Agarwal of Bonanza Portfolio, on Zee Business. It will give good returns in the long run, he adds. The stock is currently trading at Rs 58.75, up 3.1% on the BSE. 

Stay away from SKumars Nationwide, says Sudarshan Sukhani, technical analyst, on CNBC TV18. The stock is currently trading at Rs 20.90, up 2.2% on the BSE

Hold IDBI Bank which is for quite some time trading in the range of Rs 50-60, says PK Agarwal of Bonanza Portfolio, on Zee Business. Keep stop loss of Rs 50, he adds. The stock is currently trading at Rs 56.10, up 1.5% on the BSE.  

Go long on Hero Honda with target of Rs 970, says Devangshu Dutta, market expert, on CNBC TV18. Keep stop loss of Rs 890, he adds. The stock is currently trading at Rs 926.95, up 1.2% on the BSE. 

Hold Nagarjuna Construction with stop loss of Rs 45, says PK Agarwal of Bonanza Portfolio, on Zee Business. It has resistance at Rs 55, he adds. The stock is currently trading at Rs 52.75, up 0.9% on the BSE.  

Both investors and traders should sell Kernex Microsystems on rally, says Anil Singhvi, market expert, on CNBC Awaaz. The stock is currently trading at Rs 94.30, up 10% on the BSE. 

Go long on Power Grid with target of Rs 105, says Ashwani Gujral, technical analyst, on CNBC TV18. Keep stop loss of Rs 85, he adds. The stock is currently trading at Rs 93.95, up 3.4% on the BSE.  

An hour into opening, the market continues to hold on to its morning gains with rail stocks buzzing ahead of the rail budget announcement. Sensex is trading at 9631, up 165 points from its previous close, and Nifty is at 2944, up 50 points. CNX Midcap index is up 1.3% and BSE Smallcap index is up 1.5%. The market breadth is strongly positive with advances at 832 against declines of 219 on the NSE.  

Hold BHEL, says Ashish Kapur of Invest Shoppe, on CNBC Awaaz. New investors can buy on dips, he adds. It is a fundamentally strong stock, he adds. The stock is currently trading at Rs 1454, up 3% on the BSE. 

Buy TCS at Rs 490 with stop loss of Rs 475, says Ramesh Arora, technical analyst, on Zee Business. It has resistance at Rs 530, he adds. The stock is currently trading at Rs 514.55, up 1.1% on the BSE. 

Buy BEML when it is available 5 to 7% down from its current levels, says Ashish Kapur of Invest Shoppe on CNBC Awaaz. The company's valuations are good, he adds. The stock is currently trading at Rs 411.80, up 4.3% on the BSE.  

Hold Texmaco which is fundamentally strong, says Ashish Kapur of Invest Shoppe, on CNBC Awaaz. New investors can buy on dips, he adds. It will give returns of 30-40% from the current levels. The stock is currently trading at Rs 62, up 7.1% on the BSE.  

Hold JP Associates with stop loss of Rs 61, says Ramesh Arora, technical analyst, on Zee Business. It has resistance at Rs 90-95, he adds. The stock is currently trading at Rs 75.60, up 3.5% on the BSE. 

Buy Aban Offshore at Rs 443 with target of Rs 461, says Simi Bhaumik, technical analyst, on Zee Business. Keep stop loss of Rs 434, she adds. The stock is currently trading at Rs 456.80, up 3% on the BSE. 

Buy Reliance Industries at Rs 1325 with target of Rs 1425, says Ramesh Arora, technical analyst, on Zee Business. Keep stop loss of Rs 1290, he adds. The stock is currently trading at Rs 1380, up 2.1% on the BSE.  

Sell Gail at Rs 214 with target of Rs 210, says Simi Bhaumik, technical analyst, on Zee Business. Keep stop loss of Rs 219, she adds. The stock is currently trading at Rs 216.75, up 1% on the BSE  

The market opens on a positive note with most of the heavyweights in the green. Sensex is trading at 9599, up 133 points from its previous close, and Nifty is at 2935, up 42 points. CNX Midcap index is up 0.9% and BSE Smallcap index is up 0.6%. 

Market may have flat to positive opening and may remain volatile as it is still moving within a narrow range, says Ashwani Gujral, technical analyst, on CNBC TV18. He sees support at 2830-2860 and resistance at 2960-2980. Markets are moving in a very narrow range and this range may break in either direction, he adds. He advises traders to go long on dips for intra-day gains as long as Nifty is trading above 2800.  

2800 Put buyers have been squaring up their positions, says Siddharth Bhamre of Angel Broking, on CNBC TV18. This is not the right time to go short or form longs, he adds. He advises investors to wait for 3000 level for creating shorts in the market. He finds RIL and ONGC weak.  

I think we can see some technical rebound in Asian markets today but however most of the markets have no clear direction, says Patrick Shum of Karl-Thomson Securities on CNBC TV18. I think the investors are waiting for further news from US side and also from Chinese Government, so I guess in the near-term most markets will continue to move within a range, he adds. 

We are positive on the market and may see a higher base after the recent consolidation, says Deven Choksey of KR Choksey, on CNBC TV18. The Nifty can gain 100-150 points if it manages to cross 2950, he adds. He expects continued focus on capex in the Rail Budget today and additional stimulus measures in the Interim Budget next week.