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Topic : Post Budget investment strategy
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Should we avoid tech stocks post budget 2010?

Created by : Archana Singh, Relationship Executive, ICICI Bank  | 02 26 2010 13:16:51 +0000
Industry : Investment BankingFunctional Area : India(Markets)
Keywords : investment budget 2010 tech stocks
Activity:  220 views;  last activity : 07 06 2010 20:18:09 +0000

After a stellar performance in 2009, the Indian stock market is set to move higher in 2010 believe most research houses and brokerages. The performance, however, may not be as good as in 2009, due to last year's strong gains and the challenges in 2010 in terms of withdrawal of stimulus packages, higher interest rates and so. However, the brokerages expect the overall trend to be positive, and they have a target for the BSE Sensex, which ranges 19,000-21,000 by end-December 2010 and March 2011.

Budget 2010 also didn't had much to offer to the IT firms & rise in MAT could also affect the firms. Tightening by RBI will put upward pressure on the rupee with negative consequences for technology stocks, which have a negative correlation with the rupee's movement. Tech stocks have done particularly well over the past six months and also suffer on a relative basis in an accelerating domestic growth environment.

So, should we  really avoid investing in tech stocks? Please comment.

  
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First there is confusion regarding the continuance of STPI status for software companies.

The tax holiday under Sec10a and 10b has not been extended for the BPO industry, one option left for the software firms is to shift from STPI to SEZ, which makes them eligible for taxholiday for upto 15 years but again thats a very tedious process.

Still considering portfolio rejig for retail investors it would be wise to keep away from fresh long positions in the IT stocks. 

It would be prudent to invest in other sectors like - renewable energy, cements,automobiles, electrical equipment manufacturers and also public banks.
By Ranjeet Rony Sanyal, Marketing Manager, Group Product Manager  | 02 28 2010 05:36:02 +0000
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Yes,one shouldn't invest in tech stocks this year. Even still IT firms have not shown much recovery & market condition is not much stable yet. Investing in tech stocks could be risky one, instead of that one can go for other stock options that have a greater chance of growing.
By Archana Singh, Relationship Executive, ICICI Bank  | 02 26 2010 13:33:58 +0000
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Technology stocks will eventually be considered as the infrastructure stock....These days IT is the real backbone of most  business and economic processes...IT solutions...is equivalent...to what "hisab kitab" is ...to business..

It can give a stupendous leverage & advantage to the business and infrasture...provided used in effective and smart way...

Hence now it is going to be Roti, Kapada, Makan aur IT.

This sector cannot be avoided investing into.....
By suchita Ambardekar, Director on Board, Vir Rubber Products Pvt Ltd, Vir auto enterprises Pvt Ltd  | 02 26 2010 17:48:08 +0000
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Though the IT sector was not performing better in 2009, this year it is expected that it will regain its vigour. 2010 will bring more M&A both domestic as well as overseas. More FDI's & FII's aregoin to invest in india.Budget 2010 wouldn't have offered much but outsourcing business is going grow in a much bigger way.

So, according to me this year could be suitable to invest in tech stocks. But investors should be cautious & watch the markets carefully before investing.
By Esha Johar, Risk Analyst, Irevna  | 02 26 2010 13:34:30 +0000
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