Performance of major information technology companies' stocks is likely to remain stock-specific next week, with investors closely watching their Jul-Sep earnings. The CNX-IT index is seen in narrow range, and HCL may outperform its peers. The immediate support of CNX-IT is 5980, below which we will see weakness in the sector's overall performance.
Stocks of Tata Consultancy Services, which detailed its Jul-Sep results post market hours yesterday, are seen rangebound next week. The company beat market expectations, posting better-than-expected dollar-revenue growth. For Jul-Sep, the company's revenue stood at $2.85 bln, up 4.6% on quarter, while it rupee terms, it reported revenue of 156.21 bln rupees. Net profit for the quarter was 35.12 bln rupees. In the current operating context, it is important for us to remain efficient, keep a healthy grip on expenses, conserve cash and at the same time invest for the future," TCS Chief Financial Officer S. Mahalingam was quoted as saying in a release. He added the company will continue to focus on maintaining its strategy of profitable growth to maintain margins and to ensure that it can invest on an ongoing basis as technology adoption cycle gets shorter.
HCL Technologies, which reported its earnings Wednesday, also posted a better than expected 78.1% on year rise in consolidated net profit at 8.85 bln rupees. The company's revenues rose 31% to 60.91 bln rupees. Overall, we believe, the investment thesis on Infosys is now largely contingent on macro-recovery. Status quo, the upside to the current estimates is limited...and the stock may remain range-bound, at best. With the three major IT services providers having reported their earnings, all eyes are now on Wipro, which will detail its earnings on Nov 2.
