IT Stocks Outlook for the week (28.05.2012 - 01.06.2012) Stocks of major information technology companies are likely to trade range-bound next week amid lack of strong sector-specific triggers. There may be a negative bias, as investors remain cautious after negative global news that came in this week. California-based IT major, Hewlett Packard Co, Thursday raised concerns over the business outlook in Europe and the US. HP has cut its full-year guidance for revenue per share to at least $4 per share from $4.84 earlier. It also plans to lay off around 27,000 employees by the end of 2014. Our IT coverage universe witnessed subdued revenue growth during 4QFY2012 (Jan-Mar) due to the cyclical soft nature of the quarter coupled with additional macro uncertainties. All this led to delay in project ramp- ups and slowdown in the near-term demand scenario.
Additionally, software exporters, which were rejoicing with every fall in the rupee against the dollar, are now a worried lot as the extreme volatility in the rupee makes it difficult for them to plan for the future. Rupee's depreciation is beneficial for information technology companies, but then this overall volatility brings a lot of challenges in terms of planning. Most major Indian IT companies get around 70% of their revenue from the US. Since the beginning of the current financial year, the rupee has declined nearly 8%. Thursday, the currency touched an all time low of 56.37 rupees per dollar. For every 1% movement in the rupee, information technology companies see a 40-50 basis points impact on margins either way. -- You received this message because you are subscribed to the Google Groups "Kences1- Rupeedesk" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/kences1?hl=en.
