Infotech stocks bouncing back

MUMBAI: Even as trading in most sectors seems to be in a slump, the IT pack is rallying smartly on the back of rupee's depreciation. The IT index has risen by 7.3% over the past one month, beating the general trend.
During the same period, the BSE sensex has witnessed a 6.6% drop. Real estate companies have been hit the hardest, with the realty index sliding by almost 18% over the one-month period.So is it smooth sailing for IT stocks or is it a short-term rally?
"We are cautiously optimistic on the IT sector. Recession in US might hit volumes and pricing of the software companies this year, but those losses are likely to be offset by rupee depreciation," said Harit Shah, IT analyst, Angel Broking. As price of crude oil, India's largest import, remains high outlook for rupee in near to medium term is not positive.
This will benefit software sector and broking house has put either a ���buy' or ���accumulate' view on select IT stocks. Some analysts say the rally is not sustainable for much longer and investors who have made money should book some profits in stocks.
When rupee was at 39-level to dollar, many players had written off sector, expecting the domestic currency to appreciate further to 37 rupees to the dollar.
But fourth quarter results and guidance from software companies for year were decent and contrary to expectations rupee started to weaken, helping stocks from these sector to outperform market by huge margin. "On seeing the situation when everything else was down, fund managers and speculators bought into the IT sector, since it was a good contrarian bet.