IT stocks tumble; HCL Tech, TCS better off than Infosys

Bears targeted IT shares following disappointing fourth quarter numbers and full year guidance from index heavyweight Infosys. But the fall in shares of other frontline IT stocks-TCS, HCL Technologies and Wipro-was not as sharp as in the case of Infosys.
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Apr 12, 2013, 09.49 AM | Source: Moneycontrol.com

IT stocks tumble; HCL Tech, TCS better off than Infosys

Bears targeted IT shares following disappointing fourth quarter numbers and full year guidance from index heavyweight Infosys. But the fall in shares of other frontline IT stocks-TCS, HCL Technologies and Wipro-was not as sharp as in the case of Infosys.

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IT stocks tumble; HCL Tech, TCS better off than Infosys

Bears targeted IT shares following disappointing fourth quarter numbers and full year guidance from index heavyweight Infosys. But the fall in shares of other frontline IT stocks-TCS, HCL Technologies and Wipro-was not as sharp as in the case of Infosys.

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Bears targeted IT shares following disappointing fourth quarter numbers and full year guidance from index heavyweight Infosys. But the fall in shares of other frontline IT stocks-TCS, HCL Technologies and Wipro-was not as sharp as in the case of Infosys.

Infosys shares were down 16 percent to Rs 2448, while shares of TCS, HCL Technologies and Wipro were down 2-4 percent.

Infosys’s fourth quarter numbers reflect the tough environment for the sector in general, but a section of the market feel the weak performance could to a large extent reflect company specific problems. The stock is likely to see a large number of earnings downgrades in the coming days.

This is evident from the manner in which bears have not hammered TCS and HCL Technologies in the same fashion as they did to Infosys. Over the last few quarters, both TCS and HCL Technologies have reported quarterly numbers in-line or even slightly better than market expectations.

And if the trend continues, it could lead to a polarization within the sector, where investors will load up on stocks where there is better visibility of earnings growth. This could make these stocks more expensive in terms of valuations, due to scarcity value more than anything else.


 

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