Can IT stocks propel the market beyond 11,000?

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Can IT stocks propel the market beyond 11,000?

It is good to see the markets up over 250 points in face of the tragedy of the Mumbai blasts. Infosys hasn't lost its old charm. All of us could recall four years back, the magic this company has: one good guidance, one good set of results could send all stocks up 5-10%, the whole market would go up fining to what Infosys says.

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It is good to see the markets up over 250 points in face of the tragedy of the Mumbai blasts. Infosys hasn't lost its old charm. All of us can recall, four years back, the magic that this company has: one good guidance, one good set of results could send all stocks up 5-10%, the whole market would go up fining to what Infosys says. Those days don't remain anymore.

Technology has come a long way but still technology hasn't lost its old charm and it is good to see that. But aside from that what Infosys has, clearly is the reason why the market is up today.

There is a little bit more to it, the way the markets ignored the bad news and latched on to the good news. Perhaps it's some kind of hint that it is perhaps not feeling so bad at this point in time. Good news and bad news is really a function of how the market is poised to take it. If market was feeling very bearish right now, make no mistake that, it would have rallied a bit for Infosys. It did so because after opening up smartly, the markets went down into the red once again and then it rallied back and has come back 250 points.

This tells us that the market is more prone and eager to latch onto good news rather than to bad news. It also means the surest sign that this market is not in a hurry to fall off very dramatically. Although it could still happen, propelled by many factors, the way it has chosen to see the glass as half full because of Infosys, rather than half empty because of what happened last night is probably a symptom that this market is not feeling very bearish right now despite all the skepticism from analysts over the last few days and weeks.

Do IT stocks have the muscle to propel the market beyond 11,000?

If one looks at the market structure today and the way it has gone up, then technology as a sector has done very well and it got some help from capital goods. But the breadth is still a bit negative on a day when the market has rallied 250 points, there has to be something more to sustain this. Although Infosys has given the first push, the market will get to the 11,000 barrier once again and then to 11,200 that people are talking about.

Do the techs have the muscle and power in them to propel the market beyond 11,000 and keep it there? That is a million dollar question or does it need help from others like global markets and some other good news. Certainly, one doesn't want to see anymore of yesterday's incident at all. So the market needs a little bit more of follow up, Infosys has done its bit, the tech-sector has done its bit and now we need a little bit more good news to feed on for the markets to stay above 11,000 convincingly.

iGate numbers cannot influence technology sector:

iGate cannot be a benchmark for any kind of midcap or large cap technology company. It is a company, which has been in transition, more because of what they have done a few quarters back. Its numbers are quite erratic as well. One should not take the iGate numbers as a reflection of what other tech companies do. Having said that, it is certainly true that one should not expect most other companies to report 15% and 18% sequential growth in revenues and profits like Infosys has done.

Infosys might be indicative of what at least the large tech companies may do but one must not read much into iGate numbers and therefore extrapolate. It is too small a company and too erratic performance-driven company to have any great influence or say on the overall sector. But we do need a little bit more follow up from large companies like TCS , Satyam and Wipro  from a trading perspective because it is a very important trading technology stock.