MUMBAI: Infosys Technologies shares fell further on Friday, after an alliance
with Microsoft failed to meet expectations, but technical analysts believe it is
still in healthy technical territory. At 2:06 p.m. (0836 GMT), the shares were
1.01 per cent down at Rs 8,480, off a morning low of Rs 8,441. The benchmark
Bombay index, in which Infosys has the second heaviest weighting, was down 2.02
per cent at 4,577.57 points.
The shares fell 1.39 per cent on Thursday after the announcement of a global
alliance with Microsoft to develop e-business solutions built around the
Internet, as the absence of financial details suggested it was no big deal.
Market speculation that the alliance would lead to big assured revenues had led
to accumulation ahead of the deal, and post-announcement it met with profit
booking.
Short term technical weakness
Technical analyst Deepak Mohini said the disappointment had not beaten the share
down too much. "The impact has really been quite muted. Not a very serious
reaction in terms of share price. It lost barely over a per cent yesterday and
seems to be recovering now," he said.
He said the charts showed the stock was still in an uptrend. "From the
beginning of August, Infosys has been showing rising tops and bottoms. Now, it
looks like a correction within the uptrend," he said.
The points to watch were 9,000 at the upper level and 8,200 at the lower
level, he said. "If it goes above 9,000, which is a level people will tend
to sell, it will be an indication of strength. But if it goes below 8,200 it
will be a sign of weakness," he said.
Kaycee Trading Pvt. Ltd. director KG Devanathan said the share had come close
to its June high of Rs 8,938 twice in the past week and was unable to cross it
even after the high profile alliance announcement, indicating a short term sell
story.
No direct revenue impact
Analysts said the tie-up with Microsoft did not indicate any dramatic increase
in revenues. SMIFS Securities analyst Jayesh Parekh said the tie-up can be
viewed just an addition to Infosys' existing portfolio of services.
"However, as the .NET strategy of Microsoft is still under wraps, the exact
market for solutions around this technology cannot be gauged," he said.
"But as Infosys has access to the latest technologies of Microsoft
before its release in the market, a successful launch of .NET can translate into
huge volumes for Infosys," he said. He retained his forecasts for Infosys
with 2000-01 net profit estimated at Rs 5.29 billion ($115.6 million) compared
to Rs 2.86 billion excluding extraordinary write-back in the previous year and
sales at Rs 14.87 billion compared to Rs 8.82 billion.
Jardine Fleming's Sandeep Dhingra agreed that the Microsoft arrangement meant
Infosys could keep abreast of its latest technologies, but there was not much
exclusivity in the deal to give it any undue advantage. "A tie-up with
Microsoft just lends a lot more credibility to Infosys," he said.
His earnings estimates of Rs 5.79 billion net profit in 2000-01 and Rs 15.88
billion sales were not changing as a result of this deal, he said. Besides
Infosys, other Indian software companies like Satyam Computer Services and Wipro
also have partnerships with Microsoft involving Internet technologies.
(C) Reuters Limited 2000.