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IT stocks, coal usage & more

Apr 23, 2008

  • Software stocks took a severe beating yesterday with the top five losers on the NSE-Nifty being from the sector. The battering that these stocks received followed lacklustre fourth quarter performance and an uninspiring FY09 outlook indicated by the management of TCS, India's and Asia's largest software services firm. The company has actually spoken in line with indications given by its peers like Infosys, Wipro and Satyam, whose managements have talked about a couple of quarters of slowdown in technology spending.

    These companies have pointed out that while clients are seeing business restructuring and leadership changes and expect technology spending to slow down for the next two quarters, there are expectations of a pick up after that considering the leverage that offshore outsourcing provides them (the clients). They have also been pretty conservative in their FY09 revenue and profit guidance, and have maintained that scalability and employee retention will continue to be the lead drivers of growth in the future.

  • "Europeans are switching back to coal" writes the International Herald Tribune. This comes at a time when the world's top climate experts agree that carbon emissions must be rapidly reduced to hold down global warming. The report cites the example of a leading Italian power generator, Enel, which is converting its power plants from oil to coal, unmindful of the pollution this 'dirtiest fuel on earth' can produce.

    Incidentally, the IHT, while discussing China's massive consumption of coal to power its manufacturing industry, reported that, "It takes 5 to 10 days for the pollution from China's coal-fired plants to make its way to the US, like a slow-moving storm. It increases cloud cover and raises ozone levels. And along the way, it contributes to acid rain in Japan and South Korea and health problems everywhere from Taiwan to the US. Health costs related to air pollution total US$ 68 bn a year, nearly 4% of China's country's GDP. And acid rain has contaminated a third of the country. It is said to destroy some US$ 4 bn worth of crops every year." This is the dark side of the world's growing use of coal.

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