The last quarter or so has seen a revival of the IT sector in India.With U.S. in recession and companies freezing their IT spends, the business opportunities shrank for the IT vendors who largely depend on the American market for business.
However, with conditions improving in America gradually the demand for IT spend is catching up slowly but surely.This has only meant increasing business for the IT vendors and increased revenues.
One clear indication that the IT sector is growing can be seen from the fact that most of the IT vendors have removed salary freeze and are back into hiring mode.Even analyst like Gartner have seemingly upped the global IT spend forecasts.
The CEO’s of IT giants like Infosys, Wipro etc are also optimistic of the market opportunity and expect a 15-20% growth over the next fiscal.NASSCOM is set to release its IT growth predictions which are expected to be slightly lower than the expected 30% growth.
However, one nagging worry that the IT vendors will have is the currency fluctuation.There are clear indicators that Rupee appreciation is around the corner.With rupee expected to appreciate significantly going forward, it will cause a negative impact on the profitability of IT vendors.The operating currency for the IT companies is predominantly in dollar terms and the rupee-dollar conversion rate can be troublesome.
However, after a short upsurge in technology stocks following promising quarterly results from major IT vendors, technology stocks are falling again.
The BSE IT ended 100 points down today at 4917
The blue chip stocks got battered in the markets today along with other sectors.The global markets did not help the cause too as Asian and European markets ended in RED too.
As per the latest on the US stocks markets, DOW is already trading 200 points down
Will this lead to another fall in the Indian Stock Markets tomorrow ? The way the markets have been behaving for past couple of weeks , it looks like we are set for another day of markets ending in RED.
What are your thoughts? Are the IT stocks worth investing in or it is better to keep away given the currency fluctuations and the over dependence on the U.S. markets