Infosys won't outperform the market

Investment Advisor, PN Vijay is of the view that IT stocks including Infosys Technologies will not outperforming this market for a while.

Vijay told CNBC-TV18, “I don’t think we are going to see a run away rally in tech stocks because one has been talking to banks and the feeling is that the inflows are very strong and we may sterilize about USD 15-20 billion by this ECB moved. But we will still leave the rupee very strong. So if one went into that type of argument and say rupee will not breach 41, then that doesn’t leave much for the IT companies in terms of net-net margins.”
He further added, “Ofcourse having said that Infosys did very well, if you recollect in the first quarter, they came out with very strong dollar based EBITDA margins. My own sense is that it is a fairly long-term player; there is no hurry to sell it because it is such a high quality stock. But I don’t see IT stocks including Infosys outperforming this market for a while. I belong to the old school, which says that your acquisition price has nothing to do with your selling price.”

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NYSE seeks Infy listing

World’s largest exchange, the New York Stock Exchange (NYSE) is wooing India’s showpiece IT firm Infosys Technologies to list its shares on its trading platform.

Sources said the US exchange group is trying to convince Bangalore-headquartered company to transfer its shares from rival NASDAQ to NYSE, which after its acquisition of the Euronext exchange early this year, brings together six cash equities exchanges in five countries.

Currently, there are a total of 11 Indian companies (including Tata Motors, Wipro, Satyam Computers, ICICI Bank and HDFC Bank) listed on NYSE, compared to three in NASDAQ.

Recent times have seen companies such as Sterlite Industries and WNS getting listed on the NYSE while others such as Genpact announcing its plans to go to NYSE.

Getting to convince Infosys Technologies to transfer its shares to NYSE would be a tough task for its officials, given that it became the first Indian company to figure in the prestigious NASDAQ-100 Index in recent months.

Madhu Kannan, managing director (Asia emerging markets) of NYSE Group, did not respond to a mail on this subject. V Balakrishnan, CFO of Infosys Technologies, said, “at present the company does not have any plans to move to NYSE”.

He said at the time of its listing on NASDAQ in 1999, the company had evaluated both the exchanges and had preferred to list on the NASDAQ exchange.

“We decided on NASDAQ due to several factors,” he said, pointing out that NASDAQ was an exchange “where most of the global technology companies are listed.” The liquidity, depth of the market place, and volatility were the other factors, he said.

NASDAQ has been losing a stream of blue-chip companies to rival NYSE over the last couple of years.

In 2006, 13 companies including Red Hat, Under Armour and Safeco transferred their shares from NASDAQ to NYSE and in 2007, (up to June) another six companies moved from NASDAQ to NYSE. This year’s transfers include American Eagle and PetroHawk, which was the number two oil & gas company on NASDAQ.

A spokesman for NYSE said: “We have had some leading companies move here, and they include companies that were formerly part of the NASDAQ-100. There are a good number of NASDAQ transfers in the immediate pipeline for the remainder of this year, complementing the more than 130 companies that moved from NASDAQ to the NYSE since 2000.”

Significantly, NASDAQ has not attracted one company from the NYSE this year, and only a handful of companies ever moved voluntarily from the NYSE to NASDAQ, he explained.

Asked if the inclusion in NASDAQ-100 listing was acting as a deterrent to a move to NYSE, Balakrishnan of Infosys said: “I don’t think so. But, as we understand, NASDAQ is one of the few global exchanges where a non-US company can get into one of their global indices.”

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IT scrips slump to 3-month low

The rupee appreciation against the dollar took its toll on the information technology sector, with frontline and mid-cap IT stocks closing at a three-month low on the Bombay Stock Exchange (BSE) on Thursday.

Infosys Technologies and TCS closed at a three-month low, while Wipro dipped to a 52-week low. However, Satyam Computer held the fort and closed at a one-month low.

Among the second-line stocks, Tech Mahindra, i-flex Solutions, MindTree Consulting, Patni Computer Systems, Geometric Software and Polaris Software also closed at a three month-low. Hexaware Technologies (Rs 123.25) and Aztecsoft (Rs 71.60) ended in the red, closing at their 52-week low on the BSE.

The BSE IT Index was the biggest loser on Thursday, down 62.21 points at 4,649.11, declining to a 10-month low. In comparison, the Sensex, however, closed at 14,985.70 against its previous day close of 14,935.77, up 50 points.

The four blue-chip IT stocks, which are a part of the Sensex, declined in the range of 1 per cent to 3 per cent. Wipro fell 2.83 per cent to Rs 462.25 (Rs 475.70), TCS dropped by 1.83 per cent to Rs 1,095.35 (Rs 1,115.80), Infosys Technologies fell 1.55 per cent to Rs 1,899.60 (Rs 1,929.60) and Satyam Computer Services declined by 0.75 per cent to Rs 466.20 (Rs 469.70).

Among others, Polaris Software declined 4.25 per cent to close at Rs 112.25 against the previous day’s close of Rs 117.25 on the BSE. Mastek fell 3.89 per cent to Rs 272.80 (Rs 283.85), while Hexaware Technologies dropped 3.14 per cent to Rs 123.25 (Rs 127.25), i-flex Solutions fell 3.04 per cent to Rs 2,036.10 (Rs 2,099.94) and Tech Mahindra declined 1.75 per cent at Rs 1,276.50 (Rs 1,299.25) on Thursday.

During the first four months of the current calendar year, the IT index was the biggest loser among all sectoral indices of the BSE. While the IT index declined by 5.11 per cent, the Sensex rose by 14.64 per cent.

Meanwhile, the American Depository Receipts (ADR) of Infosys Technologies and Wipro hit a ten-month low on the overseas exchanges yesterday.

The Wipro ADR fell 4 per cent in last two trading days to $14.42 on the New York Stock Exchange (NYSE), while the Infosys Technologies ADR declined 3 per cent to $49.18 on the Nasdaq.

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