After a steep fall last week, stocks of major information technology companies are seen trading range-bound with a positive bias next week. The market has factored in most of the disappointments of Jul-Sep earnings posted by sector majors and there should be some value-buying at these levels.
Reacting to disappointing Jul-Sep earnings of two sector majors, Tata Consultancy Services Ltd and HCL Technologies Ltd stocks of most software exporters declined 1-7% week-on-week. The CNX IT Index ended nearly 3% lower on-week yesterday. Tata Consultancy Services was the biggest loser, ending 7.4% lower, while HCL Technologies lost 6.2%. Mid-sized companies such as Satyam Computer Services Ltd and Tech Mahindra Ltd fell 6.0% and 3.9%, respectively. Despite a robust 6.25% sequential growth in Jul-Sep business volumes, TCS' net profit in the quarter grew a tepid 2.5% sequentially to 24.39 bln rupees. Revenue increased by 7.7% from the previous quarter to 116.33 bln rupees.
Lower foreign exchange losses coupled with better utilization of resources helped HCL Technologies mitigate the impact of its annual wage hike it undertook in July as it posted a 50% on-year rise in Jul-Sep net profit. The Street will wait for sector heavyweight Wipro Ltd to post its earnings on Oct 31 to take further cues. The stock market will remain closed on Wednesday and Thursday on account of Diwali and Balipratipada, respectively. The stock market will be open on Wednesday only for a few hours for mahurat trading.
