Tech stocks were spurred on today by the firm U.S. markets and bargain hunting.
But the tech story today is a complete contrast to the poor show over the last seven sessions between 16 and 27 May 2003. In that period, the BSE IT Index lost 12.9% or 140.1 points to 946.30 from 1,086.40.
Bottom-fishing today is propelling even the top software stocks higher - HCL Tech (up 3.54% to Rs 122.75), Satyam Computer (up 3% to Rs 161.20), i-Flex (up 2.12% to Rs 850), Infosys Tech (up 1.91% to Rs 2,658), Wipro (up 1.38% to Rs 817) and Digital GlobalSoft (up 2.39% to Rs 495.55).
The buying in IT pivotals pumped up the BSE IT Index by 1.74% or 16.49 points to 962.85 today.
In addition, analysts expect software stocks to garner further interest in the next few sessions as these have been badly battered over the previous few days. However, a sustained rise may not be posible as selling may materialise at every high. There's also the overlooming concern that there's much pressure on billing rates of software companies.
Meanwhile, US stocks rallied to a higher close Tuesday, with the Nasdaq reaching its highest point so far this year, as strength in two reports on the housing sector and another on consumer confidence boosted investor optimism. The Nasdaq composite (up 46.60 points to 1556.69), helped by strength among technology stocks, climbed 3.1%. The Dow Jones industrial average (up 179.97 points to 8781.35) gained 2.1%.
Asian markets were also poised firm Wednesday, with the Hang Seng Index up 0.9%, the Korea Composite Stock Price Index up 2.2% and the Nikkei Index up 1.9%.
Reports that India will move the WTO against the decision by by four US states - New Jersey, Maryland, Connecticut and Washington - to ban outsourcing of government contracts to companies in other countries has also generated interest in the IT counters. However, these reports are only being looked upon as a sentiment booster, and are not likely to set off major gains as not much business is garnered as a result of outsourcing by US government agencies.
A positive factor for IT stocks also has been the strengthening of the dollar over the last couple of days on account of month end dollar demand from banks . A dealer from a private bank says that banks are also demanding dollars to keep the rising rupee in check. A strong rupee is not good for the Indian software sector, which earns about 70% of its revenues from the US. The rupee's appreciation means that IT companies will no longer get the 'other income' (from a depreciating rupee).
Other IT stocks that proved firm today were Hughes Software (up 3.92% to Rs 204), Polaris (up 3.39% to Rs 115.90), Kale Consultants (up 3.29% to Rs 33), Aztec Software (up 5.81% to Rs 16.40), Hexaware (up 3.13% to Rs 108.80) and Mascot Systems (up 5.63% to Rs 99.40).