Lower guidance fears spook IT stocks
IT scrips fell faster than the benchmark indices on Monday, as investors feared companies will come out with poor guidance for the first quarter ending June 2008, the rupee will continue to hurt export earnings and a slowing US economy will keep a...
MUMBAI: IT scrips fell faster than the benchmark indices on Monday, as investors feared companies will come out with poor guidance for the first quarter ending June 2008, the rupee will continue to hurt export earnings and a slowing US economy will keep a check on demand.
If the day began with worries over potential losses for companies from forex derivative deals, the rupee gave market players jitters by touching a one-month high in early trade. As a result, BSE IT index ended 5.6% lower on Monday as against the 4.4% drop in the 30-scrip benchmark Sensex. CNX IT index ended lower by 5.1% compared to a fall of 4.2% in Nifty.
Sentiments are riding low for IT stocks following fears that the rising inflation may prompt RBI to allow further appreciation in the rupee. The rupee appreciated to Rs 39.87 against the dollar in early trade on Monday, leading to worries that the profitability of the IT sector may come under further pressure. ���One has to wait and watch the market movement. RBI will also look to protect exporters��� interest by not allowing rupee to rise sharply against dollar,��� said Paresh Nayar, chief dealer, Development Credit Bank.
Analysts are also considering the slower growth guidance by Oracle for the fourth quarter as a negative. ���Lower new application licence sales reported by Oracle in Q3���08 suggest that uncertainty in the US market is far from over. Further, the management���s guidance for next quarter has substantiated growth concerns regarding discretionary IT spending,��� said Religare Securities IT analyst Hitesh Punjabi.
If the day began with worries over potential losses for companies from forex derivative deals, the rupee gave market players jitters by touching a one-month high in early trade. As a result, BSE IT index ended 5.6% lower on Monday as against the 4.4% drop in the 30-scrip benchmark Sensex. CNX IT index ended lower by 5.1% compared to a fall of 4.2% in Nifty.
Sentiments are riding low for IT stocks following fears that the rising inflation may prompt RBI to allow further appreciation in the rupee. The rupee appreciated to Rs 39.87 against the dollar in early trade on Monday, leading to worries that the profitability of the IT sector may come under further pressure. ���One has to wait and watch the market movement. RBI will also look to protect exporters��� interest by not allowing rupee to rise sharply against dollar,��� said Paresh Nayar, chief dealer, Development Credit Bank.
Analysts are also considering the slower growth guidance by Oracle for the fourth quarter as a negative. ���Lower new application licence sales reported by Oracle in Q3���08 suggest that uncertainty in the US market is far from over. Further, the management���s guidance for next quarter has substantiated growth concerns regarding discretionary IT spending,��� said Religare Securities IT analyst Hitesh Punjabi.
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