Technology funds outperform in January - March 2013

MUMBAI: According to data by Value Research, technology funds universe has given a return of 13.57% in the quarter ending March 31, outperforming the S&P BSE Sensex which lost 3.13% during the same period. Some individual stocks have performed even better. Infosys is up 27% over the last three months, while TCS has gained 23% in the same period. With earnings season likely to begin soon, investors are wondering if these valuations will sustain? "While Infosys may show a growth of 2-3% in dollar revenue, margins will dip slightly due to onsite wage hikes," says Ankita Somani, IT Analyst, Angel Broking . However with deficit at a high of 6.7% of GDP in the previous quarter, analysts see a weak rupee in the coming months.

"A weaking rupee could augur well for IT companies.," says Alok Churiwala, Managing Director, Churiwala Securities. As per analysts in the Europe region decision making is showing some signs of improving, which will help outsourcing and will benefit Indian companies. This could lead to higher revenue growth for bigger IT companies in the coming days and thereby help sustain valuations.