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Technology Stocks : Y2K (Year 2000) Stocks: An Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: Jeffrey S. Mitchell who wrote (10737)	4/5/1998 10:34:00 AM
From: Narotham Reddy	Respond to of 13949

India software stocks shine brightly [Does anyone know when InfoSys will be listed here. Bloomberg did say some nice things about this company recently.] Sunday April 5, 1:07 am Eastern Time India software stocks shine brightly By Anantharaman Muralikumar BOMBAY, April 5 (Reuters) - Investor frenzy over Indian computer software stocks will extend to the next millennium as local firms gear up to cash in on enormous growth opportunities. Strong demand for software services from western nations, changing global technologies and world class expertise among local software firms will increase performances and prices of these export-oriented stocks. ''Software firms have targeted 50 percent annual export growth in the next couple of years. They should not have a problem in meeting that,'' said Kislay Kanth, analyst at DSP Merrill Lynch Ltd. WINDFALL GAINS Investors in almost all Indian computer software companies have made a pile in the past one year. Shares of Infosys Technologies (INFO.BO) closed on Friday at 1,940.75 rupees, up 243.49 percent from 565.0 on April 3, 1997 after a one-for-one bonus share issue announced in 1997. Satyam Computer Services Ltd (SATY.BO) has soared 451.89 percent to 306.30 rupees from 55.50 a year ago and Wipro Ltd (WIPR.BO) 574.20 percent to 842.75 from 125.0. Wipro became the first Indian information technology firm to reach $1.0 billion in market capitalisation, Caspian Research (India) Pvt Ltd noted in a report last week. Other software stocks have also been big winners. NIIT Ltd (NIIT.BO) has jumped 142.86 percent to 859.75 rupees from 354.0 and Pentafour Software (PNTF.BO) 300.20 percent to 480.25 from 120.0. The DSP Merrill Lynch computer software index comprising 10 companies has risen to about 445.0 points from 131.0 in March 1997, up 239.69 percent, Kanth said. In comparison, the bellwether 30-share index of the Bombay Stock Exchange, which does not have any software firm representation, has grown just 14.50 percent to 4,076.05 points from 3,559.65 a year ago. ''Everybody wants to be in this sector, but there is very little availability,'' said Niraj Somaiya, analyst at ABN-Amro Asia Equities (India) Ltd. There aren't many listed software firms in India and even those are not highly capitalised as they are relatively new. High investment exposure to a firm would entail high costs. CHEAPER LABOUR IS BIGGEST DRAW ''India has the benefit of a very large base of technically-skilled people. On a rough estimate, Indian software personnel are 50.0 percent cheaper than American personnel,'' said Caspian's Ajay Malpani. This, perhaps, is the single biggest factor, which has drawn giants like Microsoft Corp (MSFT - news) to plan a software development centre in India. ''The software sector's visibility has improved as some really big players have descended on India drawing the best of Indian manpower into the sector,'' says DSP Merrill's Kanth. Mukesh Ambani, vice-chairman and managing director of petrochemicals giant Reliance Industries Ltd (RELI.BO), said last week that information technology offered India the best opportunities to drive economic growth. He said it was possible to employ 50 million young people over the next 20 years, adding that ''they will be able to bring in an astronomical amount of a trillion dollars'' in income. ECONOMIC SLOWDOWN? SO WHAT Being almost wholly export-oriented, the state of the domestic economy does not affect the performance of computer software firms. India's economic slowdown has hit automobile, heavy engineering and construction firms and hotels, analysts said. The country's gross domestic product (GDP) grew at 5.0 percent in 1997/98 (April-March), down from 7.5 percent in 1996/97. Amidst the economic blues, the software sector has continued growing. ''The sector is completely shielded from domestic economic slowdowns,'' said Caspian's Malpani, adding that it stood to gain from setbacks to western economies. ''If, say, the U.S. suffers an economic slowdown, there will be more outsourcing of work to Indian firms,'' he said. Indian software exports are projected to climb to $3 billion in 1998/99, nearly a third more than the estimated $1.8 billion to $2 billion in 1997/98, according to industry groups. Caspian's Malpani said the 9.3 percent depreciation in the value of the rupee since July 1997 had added to the competitive edge of Indian software. ABN Amro's Somaiya said the nature of work obtained by Indian software firms have changed in the last two years. ''They are no longer just transporting people from India for software jobs but have offshore-based arms now,'' he said. Newer problems mean more opportunities. Every new problem and technological change will provide fresh business as Indian firms operate mostly in software services. ''The Millennium Bug, the Euro currency emergence and the business process re-engineering programmes of corporates will bring in the cash for these firms,'' said Caspian's Malpani. ''There are very few nations which can match India feature by feature in the software area,'' DSP Merrill's Kanth added.