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Showing posts from June, 2009

Accenture results

Accenture results—implications for the Indian IT industry.
Recently Accenture reported inline results for 3QFY09. The positive aspect of the result was robust growth and bookings in the outsourcing business; this highlights relatively buoyant market for ‘run the business’ services, a stronghold of Indian IT names.

Implications for Indian IT services companies.

Despite Accenture’s weak albeit in-line revenue performance and another downgrade in FY2009 revenue guidance, one can see incremental positives on the outsourcing business. Outsourcing remains a strong play for Indian IT services companies, a segment which has been relatively buoyant. Infosys and Wipro remain top stocks in the sector.

Budget 2009 Expectations

India's new Finance Minister will present a full-fledged budget after a gap of 16 months and under a different set of circumstances. In February 2008, India was entering a phase of lower growth trajectory. On the other hand, current data is suggesting that, the economy is likely past the worst and improving. However, we expect the agenda of the budget to be identical, subject to a few differences. We note that, the previous FM had a far more fractious and demanding set of coalition partners to contend with.

We opine that, the focus of the FM will continue to be on sustaining and improving the rate of GDP growth and that too, equitable (inclusive) growth. Investments in infrastructure, social initiatives and agriculture are expected to continue. While fiscal prudence will be attempted, we expect little change to the Center's fiscal deficit of more than 6% of the GDP. Alternate sources of raising finances like dis-investment, relaxation of FDI norms, auctioning of telecom license…

Inflation Data

Inflation: Falls to 3.92%
• India's wholesale price index (WPI) came down to 3.92% for the week ended February 07, 2009 from 4.39% for the week ended January 31, 2009, lowest in last 13 months.
• The index number of 'primary articles' and 'manufactured goods' declined week-on-week for the week ended February 07, 2009. However, 'Fuel segment' saw some moderate up move during the same period.
• 'Fuel segment' continues to witness deflation for last nine consecutive weeks. Similarly, manufacturing segment is largely on the downward trajectory for last three months, thus, reducing the inflation risk emanating from it.
• We expect headline Inflation (read WPI) to continue to fall at an accelerated pace before coming down to sub-2.0% levels by the end of FY09.
• The speedy fall in inflation is likely to provide additional headroom to RBI for further monetary accommodation. The deteriorating real economy is also strengthening the case for further cut in policy …