www.rupeedesk.in
Stocks of major information technology companies are likely to be rangebound next week as sentiment is seen weak on concerns that impending budget cuts in the US could hit public expenditure and lead to cuts in many government projects. Many Indian IT companies are either recipients of these orders, or partner US companies that execute government projects. US President Barack Obama will meet Congressional leaders yesterday to discuss possible steps to lower the country's debt and avoid a 'fiscal cliff'. Fiscal cliff refers to tax hikes and spending cuts that will automatically come into effect in January if the US Congress is unable to reach a compromise on debt negotiations. Back home, on Monday, the National Association of Software and Services Companies revised downward the sector's growth guidance for Apr-Mar saying that non-performance of global centres has weighed on growth projections.
Nasscom has cut Indian IT industry exports guidance to 9-12% growth, down from 11-14% given out in Feb 2012. The 3% range of the guidance has not changed even after taking stock of 1HFY13 (Apr-Sep) performance. The industry body expects software and business process outsourcing exports to grow to $75 bln-$77 bln in the financial year ending March as against $69 bln in 2011-12 (Apr-Mar). At the upper end, even the revised guidance looked aggressive. Retaining a cautious stance, Oct-Mar is expected to be weak for information technology companies. While the trend for companies like HCL Technologies and Tata Consultancy Services is bearish, Infosys is likely to see some positive momentum. For the CNX-IT Index, immediate support is seen at 5980, below which the trend is negative.
