2010 will be better for IT

Thu, 31 Dec 12:30 pm

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After witnessing a strong start today, the Indian stock markets remained in the party mood during previous two hours of trade. They continued to trade above the dotted line on account of persistent buying activity in the index heavyweights lead by consumer durables, oil & gas, capital goods and auto sectors.All the sectors are trading in green currently.

BSE sensex and NSE Nifty traded in the green, up by 154 point and 46 points respectively. The BSE-Midcap and BSE-Smallcap are trading up by 0.8% and 1.3% respectively. The rupee is trading at 46.65 to the dollar.

As per a leading business daily, India's largest IT company is expecting 2010 to bring cheers to the IT industry. TCS' top management hints that it is seeing a significant pickup in IT demand as the clients are re-opening and in many cases increasing IT budgets which saw a standstill around same time last year. The banking and financial services sector which has been a top spender for IT was beaten out of shape during the financial crisis.

However, in a turnaround, it has become a lot more promising on account of a spurt of mergers and acquisitions happening there. IT spend is expected to increase on account of cost improvement initiatives and growth opportunities that the clients are seeking. TCS' top guns believe that growth in 2010 will primarily be volume driven i.e. more amount of outsourcing will be done.

Pricing is expected to remain stable for next few quarters, while it might go northwards later in the year on back of increase in demand. The company sees a lot of opportunities in the healthcare, pharma, utilities, retail and logistics sectors. However, manufacturing and telecom sectors are expected to remain muted for some time to come. The company plans to ramp up its hiring as well as salary hike plans on account of improved visibility in demand. On account of the recent financial performances by the Indian IT majors as well as their guidance for the short-term, we believe IT industry is all set to register a double digit growth in 2010.

According to a leading business daily, Indian steel makers like Tata Steel and SAIL are expecting prices of this critical building material to rise in 2010 on account of improved economic activity leading to pickup in demand. It may be noted that Tata Steel increased its steel prices by Rs 2,000 per tonne last week. Steel Authority of India (SAIL) withdrew its Rs 750-1,500 a tonne Rs rebate it offered since November 2009. An increase in raw material cost has also triggered this price hike. The price of the primary raw materials like coking coal and iron ore are expected to jump by 20-30% in 2010 as compared to their cost in 2009. This coupled with a significant demand recovery in the US and China is expected to boost steel price. Domestic demand is also on an upswing on back of a number of infrastructure projects being undertaken. We believe that this bodes well for the Indian steel makers which went through a slack period during early this year on account of simultaneous recession in the US, Europe and Japan.