Nasdaq inspires domestic tech stocks

MUMBAI: Domestic technology stocks extended their winning form at the exchanges today, tailing the positive Nasdaq trend, which closed at a 17-month high of 1,852.90, up 11.42 points or 0.62 per cent.






Shares of the country`s leading software exporters Wipro (+4.61% at Rs 1,165), Infosys Technologies (+8.10% at Rs 4,125), Satyam Computers (+3.68% at Rs 246.35) and HCL Technologies (+6.11% at Rs 206.80) looked up at the Bombay Stock Exchange (BSE) today. The BSE IT Index gained 64.84 points or 4.82 per cent to 1,409.84.





"The market is anticipating better quarterly results this time, and are building up fresh positions in the futures and option (F&O) segment, which has resulted in recent upsides," said Vishwas Agarwal, analyst, Bonanza Stock Brokers.





Agarwal added that investors have taken long positions in the futures and option segment in the entire software sector.





A majority of the big investors make use of the arbitrage opportunity, which earn them a healthy margin.





The National Stock Exchange, on August 29, introduced the futures and options contracts on CNX IT, based on the criteria prescribed by market regulator Securities and Exchange Board of India (Sebi).





Market is also positive on the technology sector on renewed hopes of a US economy recovery, as the domestic software majors derive more than 50 per cent of their revenues from North America.





Meanwhile, investment bank JP Morgan remains positive on the Indian IT services sector. `Volumes do not seem to be an issue. Indian companies are seeing good ramp-ups from existing and new clients and the pipeline is probably the best over the past 12 months or so,` said analysts Sandeep Dhingra and Manoj Singla, in a recent research note circulated to clients.





"Pricing is stabilising with new contracts coming in close to current average prices. Our sense was that most of the pricing pressure now is vendor inflicted rather than customer-driven. We believe that margins pressure would ease with a better pricing environment and emphasis on cost control," said the report.





The foreign brokerage cautions that the rupee appreciation against the US dollar is the only joker in the pack.

Source: IRIS