IT Sector Update

 Cognizant’s guidance for 1QCY12 and NASSCOM’s (National Association of Software and Services Companies) forecast for software and services export growth for FY13 are weak.
 Cognizant’s guidance for 1QCY12 suggests that the company expects a mere 2.2% qoq growth for 1Q.
 NASSCOM’s initial forecast for FY13, estimates 11 -14% yoy software and services export growth for the industry.
 Its implications are negative to the IT coverage universe, as it seems that the industry-wise demand visibility is still poor.
 It looks better to use the current rally to exit from the stocks.
 Target prices on IT stocks and assumptions on the sector remain unchanged. On a relative basis, Infosys looks better because of their conservative guidance and cheaper valuation.