IT stocks drag down indices

Thu, 24 Feb 09:30 am

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The crisis in Libya continued to dampen the investors' mood in Asia. Most of the Asian indices have opened in the negative zone. Indonesia (down 0.7%) and Japan (down 0.4%) are the main losers. Asian markets have opened on a mixed note. However, markets in Hong Kong (up 0.2%) and China (up 0.1%) are trading in the positive zone. Following cues from Asia, Indian markets have opened the day in the negative as well. IT stocks are leading the losers' pack. However, realty stocks are trading in the green.

The BSE-Sensex is trading lower by around 67 points (0.4%), while the NSE-Nifty is down by around 33 points (0.6%). Mid stocks are trading in the negative as well, with the BSE Midcap index down by about 0.02%. However, small cap stocks are trading in the positive with the BSE Small cap index up by about 0.08%. The rupee is trading at 45.21 to the US dollar.

IT stocks have opened the day on a mixed note with heavyweights such as Infosys, TCS and Wipro seeing selling pressure. On the other hand, mid cap IT firms Tech Mahindra and HCL Tech are witnessing buying interest. Mid size IT firm Mindtree announced that it bagged 2 multi-million dollar deals, totally US$ 70 m (Rs 3.2 bn from an Information and Communication Technology service provider in Europe and a US bank. This deal will be spread over a 5 year period, and Mindtree will be providing infrastructure management services, telecom support services and remote desktop management to its customers. The company hopes that these deals will help boost investor confidence in the smaller IT companies. The European order is the largest win for Mindtree till date. The management is of the opinion this contract help in garnering more big-ticket deals. The company had earlier faced some flak over its failed venture into the 3G phone business, which it has subsequently discontinued. The stock however, still closed in the red.

Mahindra Finance recently announced that it raised Rs 4.3 bn through a qualified institutional placement (QIP) of 6.1 m shares at Rs 695 per share. The firm received strong demand for the issue from international institutions, with the issue being oversubscribed 4 times. The firm had earlier stated that wanted to raise Rs 5.7 bn at a floor price of Rs 672.8 per share. The money raised will be used to enhance its Tier-1 capital base, leverage business opportunities, and help fund loans for its customers. Post the allotment, its parent Mahindra & Mahindra Ltd will hold 56% of the total equity, compared to 61% currently.