Techs seemed to be vindicated by recent gains made by the US on the war front, implying that the war may not stretch on to the detriment of the global economy.
The three software scrips in the Sensex emerged strong today HCL Technologies (up 2.96% to Rs 161.75), Infosys Technologies (up 0.75% to Rs 4,298) and Satyam Computer (up 0.35% to Rs 203.25).
Non-Sensex stocks like Hinduja TMT (up 7.66% to Rs 186.90), Aftek Infosys (up 4.91% to Rs 160.10), i-flex (up 1.54% to Rs 949.50), Wipro (up 0.77% to Rs 1,368), Digital GlobalSoft (up 1.20% to Rs 656.75), Hughes Software (up 3.68% to Rs 188.70), Mastek (up 3.92% to Rs 558.25) and Hexaware Software (up 4.30% to Rs 115.10) were among the gainers on BSE.
Dealers say this may only be a technical correction, after the losses in the previous two days . In any case, the developments on the war front may set the market trend in the coming sessions and stocks may even gain after their recent fall. Over the last two trading sessions, the BSE IT Index lost 63.33 points or 4.27% to 1,418.31 from 1,481.64. Currently the BSE IT Index was trading at 1,435.58, up 17.27 points or 1.22%.
Dealers say the current market is a traders' market and stocks are being acquired at lower levels . But if some major negative development on the war front takes place, domestic bourses could slip into the red.
On Tuesday, the tech-laden Nasdaq gained 1.55% on reports that the US-led coalition made good headway in the ongoing war with Iraq.
However, analysts fear that a prolonged war may hit IT earnings. There have been reports that IT spending will drop by 17% from US and European companies as a result of the war. The Indian IT sector receives over 65-75% of its export revenues from the US . Earlier, there were reports that the spending by major US companies was sluggish in February 2003 with a rise of just 4.3%, below the December 2002 rate of 5%. This was significantly below the 6-7% that IT managers were expecting.
Some assurance came from the National Association of Software and Services Companies when it said that a short war on Iraq would have no impact on India's information technology sector. However, if the war was prolonged, Nasscom said, there would be an impact on the world economy, which could slip into recession. Nasscom also said that global companies were outsourcing to India because the country offered the best proposition for outsourcing, with better quality and productivity at lower costs.
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