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Raja Simhan T E

CHENNAI, Feb. 20

INFORMATION technology stocks seem to have become marginally less attractive to retail investors during December 2002 as compared to December 2001.

An analysis of the shareholding pattern of the top 15 Indian IT firms (in terms of turnover) shows that public shareholding in nine firms, including leaders such as Infosys and Satyam Computers, had declined during December quarter 2002 quarter over the corresponding quarter in 2001.

On the other hand, there has been an increase in public shareholding in tier-II firms such as Polaris and Mascot Systems during December 2002 compared to a year ago.

The analysis further shows that during December quarter 2002, public shareholding in the top three firms - - Infosys, HCL Infosystems and Satyam Computers fell to 10.73 per cent (11.16 per cent), 21.95 per cent (22.14 per cent) and 7.68 per cent (9.17 per cent) respectively.

An analyst observed that the public had exited the companies as shares were quoted higher during December 2002 compared to last year. For instance, Infosys share price as on December 31, 2002 was Rs 4,773 compared to Rs 4,089 a year ago, while Satyam's was Rs 279 (Rs 237).

Interestingly, the public shareholding in tier-II companies including HCL Technologies, Mascot Systems and Polaris Software increased during December quarter 2002 quarter over December quarter 2001, even as share prices of these companies dropped in the period under review.

HCL Technologies' share priced dropped to Rs 186 as on December 31, 2002, compared to Rs 276 a year ago, Mascot Systems' to Rs 157 (Rs 198) and Polaris' to Rs 180 (Rs 202).

An analyst observed the though there had been marginal signs of IT recovery, public confidence in IT stocks had not seen any major change since the Internet bubble burst. Some of the retail investors who had bought stocks at high prices during the March 2000 lost heavily a year later when the market went southwards. Further, some retailers moved to other stocks including pharmaceuticals and manufacturing in the last few months, he added.

Interestingly, the Franklin Infotech Fund (of the Franklin Templeton Investments) in its Web site, commenting on the IT stocks scenario for 2002, observed that tech stocks rallied strongly as investors, both retail and institutions, made sustained purchases as revenues and earnings visibility improved. News of top line companies bagging some large orders, ramping up from existing clients and upping of the recruitment drive by tech majors aided sentiment.

The fund further believed that the current upswing in the domestic technology sector was only the first phase of the long-term growth story. The fact that only 40-50 per cent of the world's 1,000 largest companies currently use the services of Indian IT companies' means that customer penetration and share of IT services and BPO spend was still low.

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