TCS, HCL, Wipro, Infy rise on Bernanke's cautious optimism

The IT index constituting the top ten IT companies in India is the biggest sectoral gainer rising as much as 3.83 percent compared to the BSE Sensex which is up 2.64 percent at 11:27 am on 29th August 2011. An optimistic outlook about the long term prospects of the US economy by Federal Reserve Chairman Ben Bernanke on Friday led to a positive opening of the index.

While Bernanke cited that “a range of tools could be used to provide additional monetary stimulus” , the Fed “will continue to consider those and other pertinent issues, including of course economic and financial developments, at our meeting in September, which has been scheduled for two days instead of one to allow a fuller discussion.”

[caption id=“attachment_72061” align=“alignleft” width=“380” caption=“Bernanke buying time and a positive spin on longterm US has IT happy. Reuters”]  [/caption]

Some of the major gainers are TCS (+ 5.23 percent), Mphasis (+3.5 percent), HCL Tech (+3.84 percent), Wipro (+3.49 percent) and Infosys (+3.24 percent), Oracle Finserve (+1.98 percent) while Core Porjects (+0.12 percent) edged higher. The IT index was up at 4,719.97 points, up 180.67 points compared to its previous close of 4,719.97 points.

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The month of August was a particularly bad time for the IT sector as investors sold shares on rising concerns that technology spending by overseas clients may reduce due to a possible slowdown in the US and European countries. The BSE IT Index had declined by 3.59 percent in the earlier three sessions to close at 4,719.97 points on Friday, 26th August 2011, after its recent high of 4,895.56 points on August 23. The IT index also underperformed the Sensex in the last one month falling as much as 20.4 percent compared to the Sensex which declined by 14.4 percent.

While the Federal Reserve Chairman did not offer any new stimulus package during his speech to central bankers on Friday, investors were pleased at the fact that he was open to measures down the line. He also said that he expected the second-half growth to be better in the US after the virtually stagnant first six months.

The US is the biggest market for Indian companies as most of them derive almost 80 percent of their revenues from these markets. The downgrade of the US Sovereign debt rating to AA+ from AAA by Standard & Poor had changed perceptions towards domestic IT companies earlier. However, Nasscom, India’s main software body, reassured its estimate of a 16-18 percent growth rate for the sector this fiscal.