The Telegraph
Since 1st March, 1999
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Market marches on to Infosys beat
- Bellwether’s shine rubs off on tech lynchpins

Mumbai, Oct. 10: The smartest crop of Infosys numbers in years set off a technology twirl that sent stocks to a 39-month peak and plonked software firms, which had missed out on the rally, back to the centre-stage.

At 4,768.90, BSE sensex clawed its way back to where it was on July 14, 2000. The ascent has been one of the steepest ever —216 points, or 4.73 per cent, in the space of a week. It was hovering at 4552.92 points last Friday.

“The results were in line with our expectations, but what is remarkable is that Infosys has raised its guidance for the quarters ahead,” Arun Kejriwal of Kejriwal Research & Investment Services said. “Technology had some catching up to do anyway,” he added, suggesting old-economy stocks had been at the forefront of the rally so far, trailed by new-economy shares.

Shares of Infosys vaulted an eye-popping Rs 174.80, or 3.94 per cent, to Rs 4608.65 — a level not seen since January. The stock surged after the company declared a 32.9 per cent spike in profit and, to the delight of shareholders, announced an interim dividend of Rs 14.50 per share. In percentage terms, this works out to 290 per cent.

“The highlight of Infy’s second quarter is that margins seem to be stabilising,” Kejriwal said. The Nasdaq-listed firm raised its full-year consolidated earnings per share from 178.80 to Rs 179.30, an increase of 6 per cent from its forecast made in July. Propelled by Infosys, the BSE IT index closed 5.76 per cent higher.

Analysts expect Infosys to outperform the industry, though the buzz that other software firms would do just as well, got louder. The fact that BFL MphasiS and Hughes Software had a splendid second quarter has lent credence to the notion that technology is on the way up.

Shares of Satyam Computer and Wipro zoomed, lapped up by investors who had stayed away from software so far. Satyam was up Rs 26.15 to 281.95, while Wipro jumped Rs 105.45 to Rs 1348.45. Both will unveil results soon.

Other software stocks in the limelight were HCL Technologies, Digital Global, Mastek, Geometric Software, Mphasis BFL, Hexaware, iGate Global and NIIT.

As technology basked in its new-found triumph, gains were punctuated by bouts of profit-booking. The negative undercurrent could be seen in the fact that 890 stocks were losers on BSE against 774 shares that went up.

Traders turned cautious after 10 straight days of gains; volumes were down 16.9 crore shares from Thursday’s 18.1 crore. Some feared the technology celebration could prove premature. Kejriwal, for one, said the optimism has to be tempered with the reality of a strong rupee (meaning less export rupees for firms) and concerns over unemployment in the West. Others point to tech stocks that are 20-30 times their price-earnings — higher than old-economy stocks and key indices.

If the flavour of the market was new-economy, old-economy heavyweights did not languish: Tata Motors, Reliance Industries and Hindalco were big winners.

Rupee closes lower

The rupee’s roller-coaster ride against the dollar took a sharp detour downwards today on renewed demand for the greenback and partly by the dollar’s advance against other hard currencies.

The rupee closed at 45.3850/3950 per dollar, a 13 paise decline from Thursday’s close of 45.2550/2650 after dipping to intraday lows of 45.43/45, pulled down by a fresh wave of hectic dollar short-covering by banks.

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