Market ended on Friday in the red after a volatile session but we held on two weeks for the third consecutive week in a row so for the week sensex and nifty ended with gains of close to about a percentage and half, the mid cap index ending with gains of 1.3% reversing the previous week’s losses, bank nifty was down close to about 1% . The big player was IT as well as real estate index whereas pharma index was under pressure which was down close to about 2%.
All IT basket did well starting with M&M that gained close to 8% very strong Q4 numbers as well as monthly sales for the month of May on the other hand reliance industries provided bulk of the up move with a gain of close to about 8%. TCS is also being included in top gainers for the week.
Corporate results in IT SECTOR was quite healthier in India than say in UNITED STATES having said that there was couple of upgrades and downgrades has been noticed in IT SECTOR. This is because of high frequency data with world’s largest IT companies in India like TCS etc which named as to be the technology backbone of the world they have rammed order books along with that huge visibility on business.
The whole point doesn’t only lie to order books but companies had gone through perhaps valuation reset. If one looks at TCS which is now a 150 billion dollar market cap company listed for best part of 20 years there valuation have compounded at broadly the same growth rate at TCS’ free cash flows which is around the 20%-25 % mark these are fairly stable businesses with 20%- 25% share price compounding and deep comparative advantage in TCS case especially around recruiting approx 1.5 lakh people this year. Ability to recruit and retrain 2-3 lakh people in a year and on other side endless amounts of demand from the western world for the services are causing head scratching about demand visibility on indian IT services companies that’s probably where high frequency data and whole desire to speculate gets the better of most people.