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IT stocks on a tailspin

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CIOL Bureau
New Update

Shubhendu Parth& Rahul Gupta

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NEW DELHI: Technology stocks got battered on Thursday after Infosys posted disappointing fourth quarter results today. All the major IT players saw a dip in their price rates. Today’ stocks saw a dip of 105 points and were closed at 3035 points as compared to yesterday’ 3141 points at BSE shedding 3.37 per cent and the NSE Nifty was down 42.65 points at 962.20, shedding 4.09 per cent.

The top two losers were Mastek and Infosys. Mastek closed to 284 points down

by 49 percent and Infosys at 3044, down by 26 percent as compared to yesterday’s

figure.

As expected the market reacted sharply to the results of the Infosys and all the prices of all the major software vendors gone down. Industry experts are of the opinion that war has also had its impact on the results and since the war is

almost over now the situation would automatically improve in the coming days.

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However, most of them also suggest that the first quarter of the current

financial year would be very important and if the major IT companies report the

similar results, the blood bath is inevitable. Experts also feel that till the

IT stocks are volatile, it would be difficult to presume what the situation

would be in the days to come.

Brushing it aside as a general trend Satish Naralkar, Managing Director, NSE.IT said, "There is nothing to worry about. The war clouds has made its impact and soon the market will start picking up." Adds R Srinivasan, GM- HCL Technologies, "The trend is not peculiar to IT alone, it is an overall business scenario because of the war and there is no need to raise an alarm. In particular, people in IT have been affected by a wait and watch syndrome where they are unsure whether to go ahead in business because of the war and that has caused this unstability in the market. Maybe this can be attributed to the crash in the IT Stocks.

The business scenario is also very low since segments like BPO and ITeS

though picking up are but very slow." On the other hand Feroz R Bhote,

Managing Director of Hyderabad- based Hypersoft Technologies blames Infosys’

results for today’s crash: "This is a direct result of bad show by Infosys and

other IT majors. The results have not been in accordance with their earlier

projections and hence the market is bound to react this way." Abhijit Roy,

General Manager, Corporate Communications.

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Satyam puts it in a different way: "This crash in the IT stocks is a

result of the high expectations that were being made from Infosys results and

when the expectations crashed so did the IT stocks. I think things will improve

shortly, we are quite optimistic about it."

According to V Krishna , VP Finance, Visualsoft: "These kind of

disturbances do happen at times, specially when the geo-political situation is

not too good in the Asian region but I’m sure things would stabilize

soon."

Meanwhile, talking to the CNS, Mastek CEO Ashank Desai said that, "there is nothing to worry about as this is due to the new guidelines we have issued in the last quarter." However, others differ. While experts at ICICI securities expect the prices to go down further in the days to come before it eventually settles down and stablizes, according to Technology Capital Partners founder Sushanto Mitra, "Mastek will feel the pinch more than the bigger companies like Infosys."

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According to experts at Morgan Stanley, the fall is an over reaction and the

stocks will bounce back. However, they agree that the dynamics of IT sector has

changed and smaller companies are prone to such sufferings in any given

difficult phase, more than the bigger companies. Others are pinning their hopes

on the results of Wipro and Satyam to lift the market sentiments.

The other top losers Geometric and Wipro lost ground by 19 percent and 18

percent respectively and closed at 384 and 1007 points, while Visualsoft and

Digital Globalsoft were down 17 points and closed at 129 and 491 points

respectively.

HCL Technologies and Satyam were down by 15 points and closed at 139 and 150

points respectively. Hughes and MphasisBFL closed at 179 and 566 points down by

11 percent. Interestingly, the day also saw the stock prices of Wipro, Satyam

Computer Services, HCL Technologies and VisualSoft dipping to a 52-week low.

Company

Yesterday Close

Current (12.20 PM)

Difference

% fall

Mastek

560.20

347.85

-212.35

-37.91

Infosys Technologies

4158.05

3442.90

-715.15

-17.20

Wipro

1232.40

1042.00

-190.40

-15.45

HCL Technologies

166.35

146.00

-20.35

-12.23

Digital GlobalSoft

596.20

527.00

-69.20

-11.61

VisualSoft

156.40

139.35

-17.05

-10.90

Satyam Computer Services

178.25

159.05

-19.20

-10.77

Geometric Software

480.90

429.40

-51.50

-10.71

Infotech Enterprises

107.75

97.45

-10.30

-9.56

Ramco

471.75

429.00

-42.75

-9.06

Blue Star

119.10

108.70

-10.40

-8.73

MphasiS

639.30

585.00

-54.30

-8.49

Hughes Software

202.95

187.70

-15.25

-7.51

Hexaware

113.95

105.85

-8.10

-7.11

NIIT

109.85

102.40

-7.45

-6.78

Polaris Software labs

132.95

124.20

-8.75

-6.58

Rolta

63.50

59.75

-3.75

-5.91

E-Serve

472.40

450.00

-22.40

-4.74

I-Flex Solutions

900.10

858.00

-42.10

-4.68

Hinduja TMT

174.10

166.20

-7.90

-4.54

CMC

508.80

487.95

-20.85

-4.10

HCL Infosystems

83.35

80.50

-2.85

-3.42

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