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Technology sector earnings could well show a positive impact of the rupee depreciation by about 7 per cent, during the first quarter of financial year 2008-2009, and also benefit from volume growth being on projected lines.
For the quarter ending June 2008, companies could give a clearer picture of business progress, particularly in the backdrop of reports about a general economic slowdown.
According to a research report of brokerage and analyst firm Sharekhan, “the top line of frontline technology stocks is expected to grow in the range of 6.5 per cent - 11.1 per cent sequentially in rupee terms for the first quarter of financial year 2009. (This) growth is primarily driven by volume growth of 1-2 per cent, boosted by 7 per cent depreciation in the rupee against the dollar during the quarter."
However, in dollar terms, the sequential growth may remain muted for the quarter.
During the first quarter ended June 30, 2008, tech stocks outperformed the benchmark indices driven by factors such as depreciating rupee and extension of tax sops under Section 10A/B for one more year.
Given this backdrop, it is likely that tech firms such as Infosys may revise revenue guidance upward. This may be the case with Satyam Computer, which had earlier come up with a conservative outlook for the year.
TCS, in its annual report for 2007-2008, has referred to trimming of costs by enterprises to remain competitive, which has resulted in increased outsourcing.