Aug 27, 2009|
IT: Running ahead of realities?
Stocks from the IT sector were in the limelight yesterday, with IT bluechips providing three of the top five gainers on the Sensex. But the recent run up in IT stocks seems quite unusual to veterans in the IT industry. According to a report in a leading business daily, Mr. V Balakrishnan, the Infosys CFO has been quick to point out that even though there were slightly better macro-economic indicators, the situation at the customer level has not changed at all when compared to the earlier quarter. Says Mr. Balakrishnan, "The velocity of our business has come down due to the spending pressure on customers. We have to wait and see how the coming quarter will pan out. For now, there is no reason (for us) to relook at the guidance we have given". Infosys has given a guidance of a QoQ degrowth of 1% to 2.8% for the September 2009 quarter.
A spokesperson from Wipro too had similar things to say, and expressed his surprise at the sudden bullishness of investors with regards to IT stocks in light of the fact that nothing much has changed in the company this month (August) compared to the last (July). The business environment remains tough for the companiesí customers with no increase in their subdued spending levels. According to the company, if at all robust growth were to return, it will not be before at least 1 to 1.5 years from now.
It is not surprising to us though that the markets may well have run ahead of business on the ground. After all, it is an old habit of Mr. Market to keep attempting to accurately predict and forecast the future. And, as we all know, old habits die hard.
US builders back to buying land
After a prolonged period of write downs and distressed sales, builders in the US are back to buying land. They are now hunting for bargains, especially in states like California, Florida, Arizona and Colorado, which have been hit the hardest by the recession. But cycles have to turn, as they always do, even if they give the impression of nothing but a disastrous future when at the bottom. And so, builders are now back to doing what they do best -'build'. Their recent land purchases have been successful at sending out signals that the real estate market in the US may finally be looking up once again. According to the S&P/Case-Shiller index, an index that is representative of real estate prices in the US, home prices in 20 major cities in the US rose 1.4% on average in June from May.
But Robert Shiller, the creator of the index, has not yet turned fully positive due to this data. According to him, even though this might be an impressive turnaround, there have been many other such corrections like this in the past that have suddenly begun to look good, only to later reverse once again, and that could easily be the case this time too.
More Views on News
Jun 10, 2017
Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.
Aug 18, 2017
Buying the index now will hardly help make money in stocks even in ten years.
Aug 18, 2017
Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.
Aug 17, 2017
PersonalFN simplifies the mutual fund account statement for you.
Aug 17, 2017
A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407