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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: JPR who wrote (3560)	1/28/1999 9:35:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

Infotech stocks come finally down to earth Hi JPR: Thanks for the reply glad to see that you are OK,are you completely out of the market now? We hardly see you on any of the Si threads anymore. Our Mumbai Bureau -------------------------------------------------------------------------------- 28 JANUARY PUNTERS on Dalal Street recovered their poise after falling head-over-heels for infotech stocks, or so it seems, going by Thursday's dip in the share prices of software companies. The long-overdue correction in infotech stocks set in today after punters cashed in their chips, ahead of the last day of the weekly accounting period on the Bombay Stock Exchange (BSE). The Sensex closed at 3,292.95, down 61 points from its previous close. Leading the fall were bell-wethers Pentafour Computers and Stayam Computer Services, shedding Rs 24 and Rs 33 each to close at Rs 964 and Rs 957 respectively. Big fish Infosys Technologies also slipped, it fell Rs 149 to Rs 4,505 while NIIT dipped Rs 159 to Rs 2,214. Even more revealing was the erosion in their market capitalisation. The sell-off shaved Rs 1,687 crore off Infosys' market capitalisation at Rs 7,217.81 crore, Wipro Rs 1,088 crore to Rs 17,477.27 crore. The others were NIIT, whose market cap lost Rs 410 crore to Rs 5,705 crore, Satyam Computers lost Rs 82 crore to Rs 2,409.45 crore, and Pentafour Software Rs 40.47 crore to Rs 1,643.51 crore. ''Infotech stocks were undeniably stretched,'' a dealer said adding, ''you can't have shares spiralling up three-to-four per cent every day.'' Lured by their high earnings growth potential and perceived insulation against economic slowdown, punters had, in the past few weeks, built excessive positions in infotech stocks. But at current valuation - prominent infotech companies command P/E ratios (Price to earnings) of between 70 and 80 - these stocks seem to have got too hot to handle. Even for the hard-nosed punters on Mumbai's Dalal Street. FMCG stocks, however, bucked the trend. Consumer products giant Hindustan Lever (HLL), for instance, was the only Sensex-weighted scrip that rose to Rs 1,819 on brisk buying, fuelled by speculation of a bonus issue. The HLL stock touched a new high of Rs 1,886 in intra-day trade. Other consumer stocks like Cadbury's, Dabur India and Reckitt Coleman too touched new highs of Rs 613, Rs 555 and Rs 422.