The Hindu Business Line : IT stocks back in favour

“The overall global sentiment has improved and the economy has shown signs of stability,” said analyst, Mr Harit Shah, of Angel Broking, a brokerage firm.

“Clients are slightly more positive about IT budgets though pricing pressure will continue,” he added.

The strong forecast provided by Cognizant is also an indication that things would improve in the future, Mr Shah said.

Cognizant has guided for an 11.5 per cent increase in revenue for fiscal 2009, compared with the previous fiscal.

Some positive data points coming from the US has helped to lift the sentiment, Mr Gaurav Dua, Head of Research, Sharekhan, said.

“The semiconductor scene in the US has shown some healthy signs and a survey by a recruitment portal has shown that the US firms have stopped laying-off employees on the technology side,” said Mr Dua.

There has been some improvement with regard to unemployment rates as well. “All these indicate better prospects and that is pushing the stocks up,” he added.

Another reason why the IT stocks have fared well is that they have not been affected by concerns over a weak monsoon in the country.

“Such concerns have had no impact on IT stocks,” Mr Dua added.

Research firm Edelweiss said, “The big picture we see emerging from their results is that volumes are stabilising and pricing is not faring as badly as we thought.”

The top three companies’ focus on eliminating non-essential, costs has ensured margin resilience in this tough period.

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