Dalal Street

Infosys Technologies Ltd, will announce its results for the FY06-07 and will issue a guidance for FY08-09 on the 13th of April. With FBT coming into force from April-1st, Infosys was forcing all its employees to exercise options to avoid taxes. Adding to IT exporters woes is the weak dollar.

Infosys stock has taken a beating of 20% from its high of Rs 2,400. Merill Lynch expects Infosys guidance for EPS growth to be in early 20s and will disappoint the market. The report further adds that the outsourcing story is intact and Merill maintains a BUY with a 12 month target price of Rs 2,600 which is slightly optimistic.

In the near term, their will be weakness in Infy stock however one who wants to take exposure should do so only from long term perspective [12 Months]. TCS has fallen by just 8% from its high of Rs 1,300. I don’t agree with analysts who are biased in recommending a 5% discounted target for TCS compared to Infosys. I feel it is unjustified looking at the way TCS is cutting deals and expanding.

The Reserve Bank of India has hiked the CRR by 50 bps to 6.5% to be effective in two phases – 0.25% from April-14th and another 0.25% from April-28th. The move will suck Rs 15,500 crore from the system. The last time RBI had hiked was in Feburary.

RBI has also has hiked the repo rate by 25 basis points (bps) to 7.75% with immediate effect. This means borrowing cost of Banks will go up and will hit their bottomline. Adding to the banking sector woes, RBI has also decreased the rate of interest on CRR desposits from 0.5% to mere 0.25%.

Man Industries has bagged an order to manufacture and supply 257 miles of LSAW and HSAW line pipes coated externally and internally with anti-corrosive systems. With this new order, Man Industries order-book stands at Rs 2200 crore.

Man Industries board meets on 31 March 2007, to consider a scheme of demerger between the company and Man Aluminium.

Man Industries is involved in manufacturing and supply of steel line pipes for high and medium pressure applications such as oil, gas, petrochemicals and water transportation. The company is one of the leading manufacturers and exporters of saw pipes and aluminium extrudates.

Man Industries posted a net profit of Rs 16.47 crore in the December 2006 ended quarter against Rs 7.83 crore in the December 2005 quarter. Net sales for the December 2006 quarter rose to Rs 327.11 crore (Rs 206.49 crore).

TCS plunged 4.3% to Rs 1205, Wipro lost 4% to Rs 561.70, Satyam Computer shed 4% to Rs 453 and Infosys shed 3.1% to Rs 1990.

IT stocks fell for the second day in a row today. The fall on Monday (26 March) arose out of concerns from the rupee’s recent surge against the dollar. The BSE IT Index had lost 58.31 points on (26 March), to 5,009.42. IT scrips had recovered from their lower level after a sharp fall in late-February – early-March 2007. The BSE IT Index had surged to 5,095.28 by 22 March, from a low of 4,730.30 on 5 March.

A crisis in the US subprime mortgage sector, which issues mortgages to high-risk borrowers, has raised concerns whether the broader housing sector, and even the world’s largest economy, might be dragged down as well. The IT industry derives up to 60 – 70% of its revenue from the US market. The IT industry is eyeing an export turnover of $31 billion in the fiscal ending March 2007, at a time when the demand for offshore outsourcing remains strong.

Some in the investment community believe that IT bellwether Infosys’ guidance for FY 2008 (year ending 31 March 2008) can be conservative in view of risks of a global slowdown. Infosys unveils its full year guidance at the time of announcing fourth quarter and annual results in March.

Any rise in the rupee directly impacts the revenue and profits of IT firms proportionately. The Indian rupee traded just below its strongest level in more than seven years on Wednesday (28 March 2007), as banks continued to sell dollars to generate funds in order to tide over a cash crunch.

At 12:00 IST, the rupee was at 43.157/167 per dollar. A break of 43.115 will take it to its strongest level against the dollar since November 1999. The rupee had settled at a 20-month peak of 43.29/30 on Monday (26 March).