Upgrades for IT?

The rupee factor may lift margins of tech companies, but the outlook on deal volumes is much more important for stock valuations. That is the key finding of Standard Chartered Equity Research on Indian IT service companies. The report says: “We see INR-led earnings upgrades across the sector after June quarter results. However, past trends especially during 2008-09, indicate that mid-range stock moves and valuation track volume growth outlook (US$ revenue growth as proxy) more closely than INR up/down moves. Potential guidance moderation/cautious commentary could thus keep Tier 1 (IT stocks) range-bound near-term, in our view.”