Infy stands out - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Infy stands out

Mar 17, 2001

The US markets crashed this week on the continued fears of recession and non-stop earnings warnings. Almost all the frontline stocks hit new 52 week lows. The slide in the markets wiped off billion of dollars of investor wealth. The negative flow of news in the US markets continued which pulled the Dow below 10,000 for the first time since last October. To begin with companies including Ericsson (the world’s third largest mobile phone maker), Cisco, McDonald Corp., Compaq and Oracle warned of a quarterly earnings slowdown. Most of the companies also announced massive job retrenchments. Financial stocks were hit hard after a major international rating agency expressed concern about the depressing financial situation of Japanese banks. Ciena Corp. (optical networking equipment maker) and Nokia however, gave some hope by indicating that they are likely to meet quarterly earnings targets.

The news on the economic front showed a mixed sentiment. Retail sales in the month of February fell for the first time since November ’00. On the other hand consumer sentiment index climbed to 90.8 in March from 90.6 in previous month. Economists had expected the index to fall to 89.5.

Infy shines
(Price in $) 10-Mar-01 17-Mar-01 Change
Infosys 66.8 71.0 6.4%
ICICI 12.3 11.7 -5.0%
Rediff 3.4 3.1 -9.3%
ICICI Bank 8.0 7.2 -10.5%
VSNL 14.0 12.5 -10.9%
Wipro 43.5 36.3 -16.6%
Silverline 5.2 4.0 -22.6%
Satyam Infoway 3.9 3.0 -23.8%

The markets did not spare Indian ADRs too. Sify, Silverline and Wipro were the major losers. The liquidity on most of these counters declined substantially.

Surprisingly, Infosys was up by 6.4% over the week. This was despite nervousness in the tech stocks on the NASDAQ. Infosys issued a statement that its business plans has not been affected by the global slowdown. As the global companies are increasingly looking to cut IT spending, they are more likely to outsource their technology requirements from Indian firms. This is likely to help them in reducing costs, as billing rates in India are comparatively low.

Aetna, a leading provider of healthcare insurance in the US had decided to double its business with Infosys. According to Aetna, it’s taken a decision to outsource more business to Infosys because it had delivered quality business at low costs. Currently, Aetna the fourth largest customer for Infosys, accounts for 2% of Infy’s business and by the year-end the figure is expected to shoot up to 4% (around Rs 706 m).

One of the key foreign investment bankers also forecasted a positive outlook for the Indian IT stocks. These positive news helped in lifting the sentiment in the Indian tech major Infosys.

VSNL also attracted some buying support early during the week. This was on the news that the Cabinet Committee on Disinvestment (CCD) has decided to complete the privatisation of the company by December 31, ’01. However, the stock failed to maintain the buying interest and ended lower by 10.9%.

ICICI group companies were in the limelight during the last two days of the week. ICICI has divested a 5% stake in its subsidiary, ICICI Bank, to Prudential Assurance Company Ltd. at an average price of Rs 170 (US $ 7.3 per ADR). This has fueled the buying interest in both ICICI and ICICI Bank. ICICI gained an amount of Rs 1.7 billion through this deal, which it can use to write off its non-performing assets. Otherwise the capital gains are expected to increase its net profits by more than 10% in the current year.

There seems to be no catalyst for the markets to drive the stocks up. The investors are keenly waiting for the Fed’s meeting on March 20, which could come as a lifesaver for the sliding markets. The policy makers are expected to announce an interest rate cut of 75 basis points.

Global crash
Indices 10-Mar-01 17-Mar-01 Change
NASDAQ 2,053 1,891 -7.9%
Dow 10,645 9,823 -7.7%
Hang Seng 14,194 13,522 -4.7%
Nikkie 12,628 12,233 -3.1%
BSE 3,882 3,746 -3.5%

Equitymaster requests your view! Post a comment on "Infy stands out". Click here!


More Views on News

AVANTI FEEDS Announces Quarterly Results (1QFY21); Net Profit Up 14.1% (Quarterly Result Update)

Aug 28, 2020 | Updated on Aug 28, 2020

For the quarter ended June 2020, AVANTI FEEDS has posted a net profit of Rs 1 bn (up 14.1% YoY). Sales on the other hand came in at Rs 10 bn (down 12.6% YoY). Read on for a complete analysis of AVANTI FEEDS's quarterly results.

RELAXO FOOTWEARS Announces Quarterly Results (1QFY21); Net Profit Down 51.3% (Quarterly Result Update)

Aug 24, 2020 | Updated on Aug 24, 2020

For the quarter ended June 2020, RELAXO FOOTWEARS has posted a net profit of Rs 242 m (down 51.3% YoY). Sales on the other hand came in at Rs 4 bn (down 43.9% YoY). Read on for a complete analysis of RELAXO FOOTWEARS's quarterly results.

FORTIS HEALTHCARE 2018-19 Annual Report Analysis (Annual Result Update)

Oct 18, 2019 | Updated on Oct 18, 2019

Here's an analysis of the annual report of FORTIS HEALTHCARE for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of FORTIS HEALTHCARE. Also includes updates on the valuation of FORTIS HEALTHCARE.

THOMAS COOK INDIA 2018-19 Annual Report Analysis (Annual Result Update)

Oct 18, 2019 | Updated on Oct 18, 2019

Here's an analysis of the annual report of THOMAS COOK INDIA for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of THOMAS COOK INDIA. Also includes updates on the valuation of THOMAS COOK INDIA.

MSTC IPO: Should You Bet on This State-Run E-Commerce Player? (IPO)

Mar 13, 2019

Should you subscribe to the IPO of MSPC Limited?

More Views on News

Most Popular

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

Can the Nifty Fall to 10,200? (Fast Profits Daily)

Sep 24, 2020

The Nifty has reached an important support level today. If it breaks then we could see further downside.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...


Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms