IT sector to underperform for atleast 6-9 months

Surprisingly  technology sector has shown some amount of leadership over the last couple of days. Today when equity markets closed near the high point of the day breaching some important psychological levels, the BSE IT Index also closed at 3,686.35 up 8%. HCL Tech, Infosys, Tech mahindra, TCS, Tech Mahindra were among major gainers.

Even rupee trimmed gains against the dollar today after RBI stepped in through state-owned banks to mop-up dollars following the local unit's rise to a three-week intraday high of 40.01 rupees per USD. The spot rupee ended higher at Rs 40.11 per USD as against its previous close of Rs 40.27.

Despite some positive sign for the sector, Experts like Anup Maheshwari of DSP Merrill Lynch are still underweight on the sector. "We will be underweight for at least another six to nine months. To our mind the fact is that in the last one-month particularly, we had started sensing a bit of a business slowdown is a strong word but definitely the business seems to be not growing at the same pace that it was earlier and there are a little bit of uncertainties creeping into the system. It is quite clear that earnings this year in FY09 will be reasonable but FY10 will definitely take the impact of higher taxation and therefore if one has sub par earnings growth or below the overall average, it is very difficult to imagine this sector outperforming consistently. So there will be bounces here and there but on a sustainable basis, as a trend, there is still time before the IT sector fits into that category."

List of IT stocks that gained in today's trade