The software sector is witnessing renewed interest among investors in the current fiscal. Though clouds of uncertainty still prevail, the industry has picked up and recovered some lost ground in prices. A look at prices show that on the day the BSE Sensex hit the all-time high of 21 ,206.77 (10 January 2008), the BSE IT Index was 4,325.50. On 3 August 2009, the BSE Sensex closed at 15,924.23 - down 25% from the peak. But the BSE IT Index closed at 4,001.90, representing only 7.5% fall since 10 January 2008.
A few companies succeeded in singledigit volume growth to the surprise of the market, which was expecting an overall dip in volumes. More important, the companies succeeded in recording margin improvement in the quarter ended June 2009 over the March 2009 quarter. The June 2009 quarter is traditionally the quarter with the least margin in all the four quarters mainly due to salary hikes that take place this quarter. Though this factor was non-existent in this quarter, the quantum of improvement came as surprise to all. The second characteristic was the stability shown in the banking financial services and insurance and the North America verticals.
Other aspects worth noting in the quarter were the cross-currency tailwinds and the commentary about funnel building. On the flip side, the number of deals up for bidding or decision making decreased. Revenue was impacted by the rupee appreciation against the dollar. The rupee appreciated 2.8% on an average and 5.5% at closing prices. However, this was compensated to some extent by the US dollar depreciating against the euro and Great Britain pound (GBP) - the so-called cross-currency tailwind. Depreciation was about 5.5% against the euro and 8.5% against the GBP on an average.
Consolidated operating revenue of52lTi ITES companies taken together dipped 2% to Rs 30563 crore in the quarter ended June 2009 over the March 2009 quarter on rupee appreciation with benefits seen due to crosscurrency tailwinds and negative-to-flattish
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