With Infosys announcing a good first quarter results and better revenue guidance, tech stocks rallied across-the-board on the Indian bourses yesterday (June 10, 2003). While Infosys was up 11.02 per cent, Wipro and Satyam gained over 9.5 per cent each. This was in sharp contrast to Infy's previous quarter results, when its share price tanked 20 per cent in a single day on April 10, owing to the company's poor future guidance. This quarter, however, Infy took the market by complete surprise. The software services major's net profits increased by 7.33 per cent, from Rs 259 crore in the previous quarter to Rs 278 crore in Q-1 this fiscal. On a year-on-year basis, this translates into a 28 per cent rise.
Following this, the 12 technology funds gained 7.57 per cent yesterday. Franklin Infotech Fund gained the maximum (up 10.21 per cent), as it had the highest exposure to Infosys (nearly 32 per cent, as on June 30). K-Tech and Magnum IT, which had about 22 per cent exposure each in Infosys gained 8.86 per cent and 8.38 per cent, respectively. However, the second-highest gainer among tech funds, Birla IT (up 9.61 per cent), did so on the back of other tech stocks like Visualsoft Technologies (10.16 per cent allocation) and I-flex (9.12 per cent allocation). The share price of both stocks moved up by over 20 per cent.
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On the other hand, Alliance New Millenium was among the least gainers in the category (3.82 per cent) as it exited Infosys in May 2003. Among all tech funds, Chola Freedom Technology gained the least (3.67 per cent), as it had a high cash exposure of 16.75 per cent, as on June 30, 2003.
Overall, the BSE IT Index—in which Infy has about 30 per cent weightage—gained a sharp 10.34 per cent on June 10—the highest one-day gain since September 24, 2001, when the index had moved up 13.65 per cent.
Going ahead, Infosys has predicted a consolidated total income of Rs 4,496-4,568 crore (including its BPO arm, Progeon). Also, it has revised its full-year EPS guidance upwards to Rs 168-169. While Infy results may have provided a fresh leash of life to tech stocks, a lot will depend on how other tech heavyweights like Wipro, Satyam and HCL Technologies perform. We are keeping our fingers crossed.
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