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IT stocks set Sensex alight
Fri, 25 Mar Closing

IT stocks helped buoying the indices to reach even higher levels during the final few hours of trade. As a result, the Indian stock market closed in the green once again today, ending the week on a positive note. The BSE-Sensexclosed with gains of around 465 points (up 2.5%) whereas NSE-Nifty logged in gains to the tune of 132 points (up 2.4%). Gains were also seen in BSE Midcap and BSE Small cap indices as both closed higher by around 1% each. However, these smaller indices could not hold a candle against the largecap's performance today. Markets had a good trading week, with four days of straight gains.

Most Asian stock indices closed in the positive today, with Europe also opening in the green. Rupee was seen trading at Rs 44.65 to the dollar at the time of writing.

IT stocks had a field day today, with large-caps like Infosys, Wipro, HCL Tech and TCS seeing strong gains. These stocks saw gains of over 3%, with Infosys gaining around 5%. Most of these gains were on account of NASSCOM, the apex body of IT and ITES industry, requesting the government to extend the Software Technology Parks of India (STPI) scheme for an additional year. These benefits were supposed to come to a close by the end of FY11. And if these benefits are extended, it would help sustain the growth momentum of the US$ 76 bn Indian IT industry.

NASSCOM has also requested the government to rethink on the imposition of Minimum Alternate Tax (MAT) on companies that were set up in SEZ (special economic zones). As per the latest Union budget, the finance minister even brought SEZs under the MAT regime. In anticipation of these measures being considered, most IT stocks ramped up significant gains.

Leading commercial vehicle (CV) manufacturer Tata Motors became the first Indian company to produce 100,000 CVs in a single year (FY11). In the current, with a lot of pent up demand coming to the fore, auto manufacturers had a record year in terms of sales volumes. Higher interest rates have not yet had an impact on the CV industry. However 8 rate hikes, in less than a year, may make financing vehicles more expensive.

Increased input costs may also have an adverse effect on the industry growth rate. The sector wide growth rate was around 20-22% in FY11, which is expected to slow down to 10-15% in FY12, according to Tata Motors.

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Mar 26, 2011

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Mar 22, 2018 11:43 AM