Indian IT sector not at fast rebound in year 2010 caution about these stocks

Investors need to have a look on following reasons before investing in IT - Software sector for this year 2010.
This note is for short term investors looking to get short term returns like in 3 months to 10 months.

1.First and very important reason is currently the IT-software companies are trading at higher valuations taking into consideration their forward earnings.

2.In coming months if the dollar value appreciates then the rupee value will decrease and this will have negative impact on companies earnings as they earn in dollar.
So going further if the American economy recovers then it is sure that dollar value will appreciate and hence the rupee value will decrease and this will have negative impact on companies profits but how the market participants will react and how the share prices will move we need to watch and watch.

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3.Most of the returns for Indian IT- software companies come from western countries and some from European countries.
These countries are not recovered, so IT spending would not be generous in year 2010 as compared to earlier years. This will make the companies to declare either the stable revenues or some decrease in revenues.

4. Currently top IT companies are trading with PE (price to earning ratio) 22 to 30 estimated earning of financial year 2010-2011 so if the share price of IT-software companies want to continue their uptrend then they have to post very healthy quarterly results or else the share uptrend will be stagnant and profit booking is expected in year 2010.

5.Taking into consideration their current valuations and above points it is understood that very little upside is left of around 5% to 10% maximum unless and until some good news favoring IT-software industry comes in the market.
So investors can think of all these points before investing and expecting for short term profits in year 2010.

6.IT sector not fast rebound in year 2010 (click on link)

Please Note - On the other hand investors looking for long term returns should invest at lower levels.
Investors can write to us to know the levels for investing.

The following are TOP IT -software companies with market capitalization

Infosys Technologies
Current Price - Rs 2583
EPS - 105.86
PE - 24.42

Tata Consultancy Services (TCS)
Current Price - Rs 734
EPS - 25.26
PE - 29.05

Wipro Technologies
Current Price - Rs 690
EPS - 27.31
PE - 25.38

Mphasis
Current Price - Rs 726
EPS - 39.93
PE - 18.2

Oracle Financial Services
Current Price - Rs 2346
EPS - 97.40
PE - 24.08

Tech Mahindra
Current Price - Rs 1041
EPS - 64.07
PE - 16.24

Patni Computers
Current Price - Rs 492
EPS - 31.5
PE - 15.62

Financial Technologies
Current Price - Rs 2346
EPS - 97.4
PE - 24.08