Tech Sector Outlook: What to expect?

The BSE Sensex crossed the historic 20k landmark last month as bourses went jubilant with the market performances. Our Sensex is mainly composed of heavy tech component and the share prices of Infosys, Wipro, Reliance jumped to 8-9% higher, from a 2.6% gain of the Infosys share back in May 2nd Q’07. Infosys, being the second most heavy-weighted stock in the Sensex, investors always have a ‘watch-out’ attitude for its performance. The global technology and the telecom sector have been in growth phase and as such, we are bullish on the tech and telecom sector in the long term perspective, though short term hitches downgraded the tech/IT sector outlook in India as per our previous recommendations.

Our bearish view on tech sector comes on the light of US nad global slowdown in exports and on the face of further rupee appreciation in Q1'08. We have followed the trend in the BSE, and back in June 2007 when it was trading around 14700 mark, there was a resistance level of 16,000, which it crossed in early August. Our forecast for the Q1’08-Q2’08 is bearish, less the subprime crisis and we expect the market to breach the resistance level of 21700 and look beyond 24000 in 3rd Q’08. And we expect the banking and finance and the infrastructure sector to perform better in the later half of FY’08. We also hope that some new techies with their IPO’s will be hitting the market onward 1st Q’08.

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