Ten software stocks rose 0.22% to 4.09% at IST on BSE on bargain hunting after recent heavy losses triggered by economic worries in US and Europe, the two biggest markets for the Indian IT firms.
iGate Patni (up 4.09%), HCL Technologies (up 2.80%), Rolta India (up 2.53%), Tech Mahindra (up 2.48%), Oracle Financial Services Software (up 1.81%), MphasiS (up 0.99%) and Mahindra Satyam (up 0.22%), edged higher. India's third largest software services exporter Wipro rose 1.73%.
India's second largest software services exporter Infosys rose 2.51% on reports the company is in talks to acquire a US-based information technology company in a deal which could be worth $500 million to $750 million. Infosys executive co-chairman S. Gopalakrishnan on 8 September 2011 said clients are unlikely to cut their technology budgets for 2011, though they may end up cutting them for next year. He also warned that clients may hold back spending budgets earmarked for this year. Infosys had earlier said that it is witnessing delays in decision-making by clients.
India's largest software services exporter TCS gained 3.17%. TCS said today, 13 September 2011, the demand for outsourcing technology services continues to be good, although economic uncertainties in Europe remain the biggest concern for the technology major. TCS is cautiously optimistic about the demand for outsourcing services as clients remain wary of spending in an uncertain economic environment, S. Ramadorai, vice chairman, said in a media interview. Ramadorai's comments come amid fears of a growth slowdown in India's technology companies amid the ongoing debt crisis in Europe and a slowdown in the US--the two main outsourcing markets.
The BSE IT index was up 2.54% at 4,910.25. The index outperformed the Sensex, which was up 1.39% at 16,731.45.
The BSE IT index had slumped 5.48% in the preceding two sessions to 4788.48 on 12 September 2011, from a recent high of 5065.96 on 8 September 2011. The BSE IT index had underperformed the market over the past one month until 12 September 2011, falling 4.32% compared with the Sensex's 2.01% rise. The index had also underperformed the market in past one quarter, sliding 21.42% as against 9.67% decline in the Sensex.
A weak rupee aided today's recovery in IT shares. The Indian rupee posted its biggest single-day fall in more than 15 months on Monday, 12 September 2011, as heightened fears over a likely Greek debt default triggered a flight to safe-haven dollar, while a slump in July's local industrial output data also weighed. The partially convertible rupee ended at 47.22/23 to a dollar, 1.5% weaker on the day to log its biggest single day fall since 1 June 2010, after touching a low of 47.23, a level not seen since 22 July 2010. A weak rupee boosts revenue of IT companies in rupee terms as the sector derives a lion's share of revenue from exports.
The National Association of Software and Services Companies, or Nasscom, the main software trade body on 23 August 2011 reiterated its estimate of the industry recording 16%-18% growth in export revenue this fiscal year. Nasscom had in February 2011 forecast the industry's export revenue at $68 billion-$70 billion for the fiscal year that started on 1 April 2011. Nasscom has reiterated estimate of growth in export revenue this fiscal year despite fears of economic troubles in the main outsourcing markets viz. the US and Europe.
