Tata consultancy services is India’s largest software services provider. The remarkable rise in the net income of Tata Consultancy , has caused fluctuations in the Indian Stock market.
Tata Consultancy climbed 5.3 percent to 823.50 rupees, the biggest gain since May 26, as of 10:36 a.m. local time. The stock led gains on the Bombay Stock Exchange’s benchmark Sensitive Index, or Sensex, which was little changed.
The results helped ease the concern Infosys Technologies Ltd. triggered this week when it reported an unexpected drop in profit and pushed shares of Indian computer-services companies lower. However, gain of Tata Consultancy has come has as a hope of revival for the sector. Demand for information- technology services is strengthening in the U.S. as customers resume spending.
“We’re seeing that demand from the U.S. is very strong,” said Naushil Shah, analyst with Anand Rathi Financial Services Ltd. in Mumbai. “Normally in a downturn, the discretionary spend is what goes for a toss. That’s turning around now–they are seeing a pickup in spending, and possibly a pricing increase towards the end of the year.”
Sales in TATA consultancy that provides computer services and back office support to clients from Citigroup Inc. to General Electric Co., rose 14 percent to 82.2 billion rupees, surpassing the 80.6 billion rupee average of 36 analyst estimates compiled by Bloomberg.
The company, which derived 53 percent of its revenue from companies in North America, 16 percent from the U.K., and 11 percent from continental Europe last year, added 36 clients and won orders during the quarter from Norway’s Telenor ASA and entered into an agreement with Rolls-Royce Group Plc to set up a design and engineering services center in Bangalore.
It is being estimated that the worldwide information technology spending, which includes computer equipment and software purchases, will grow 9.3 percent this year from an estimated $1.4 trillion in 2009, according to Forrester Research, Inc. in Cambridge, Massachusetts. The U.S. will lead the growth, spending an estimated $550 billion on information technology this year.
This comes as an opportunity for the Indian IT sector and computer services sector to further make considerable level of gain. As an investor one can definitely hold on to the stocks of this sector. With the increase in the spending to invest, demand will further increase causing a price hike in the IT sector ultimately leading to gains to the company.
TATA consultancy as of now seems to be a good buy and hold stock..
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Source: bloomberg.
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