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Infosys back in driver’s seat

Infosys is back on top of the markets. The tech giant pushed Sensex up most last week, writes Vyas Mohan.

business Updated: Oct 07, 2007 23:57 IST
Vyas Mohan

Infosys is back on top of the markets. After being battered for months by the rupee’s appreciation and worries of slower growth in the US, Infosys has regained its pivotal role in the Sensex. Shares of the information technology giant have emerged as the biggest index mover, contributing more than 160 points to the Sensex in the last six sessions.

While the Sensex has gained 851 points in the last six sessions after crossing 17,000, intra-day, on September 26, the Infosys scrip firmed up by Rs 218.50 to close on Friday at Rs 1,989. This gain of 12.3 per cent in Infosys, the third heaviest stock in the Sensex, has contributed 160.5 points to the index. Reliance was the second biggest contributor, providing 88.9 points to the Sensex rise, followed by Larsen & Toubro (87.6 points), Reliance Energy (87 points) and ICICI Bank (77.4 points).

The Infosys board is meeting on October 11 to discuss second-quarter results. The infotech bellwether is expected to follow its decade-old practice of declaring an interim dividend of not more than 20 per cent of profit after tax, according to brokers.

Market experts say despite the rupee appreciation, a few positive surprises can be expected in the results of the big three of the infotech pack. They expect the pullback rally in these stocks to continue in the near term.

“The big three--Infosys, TCS and Wipro--are expected to spring a few surprises on the earnings per share (EPS) front. They are taking measures to mitigate the currency appreciation risks and could maintain an EPS growth of 30-35 per cent, going forward,” says Mahesh Bhagwat, head of equities at Mape ADMISI Securities.

From a 52-week high of Rs 2,439 recorded in February this year, Infosys shares had slid 28.5 per cent to hit a low Rs 1,745.15 on August 17, after the US sub-prime crisis snowballed. Infotech stocks, which were already feeling the heat of a strengthening rupee, were the worst hit as investors feared the crisis could spill over into the wider economy, causing a liquidity crunch and even a recession.