Todays Stock Market Summary Chart Of Friday February 3, 2017

Todays Stock Market Summary Chart Of Friday February 3, 2017

   February 03, 2017       prabhakardalvi

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• 12 April 2013. Infosys corrected by a remarkable 22%, wiping off Rs 357 billion in investor wealth. The reason: disappointing revenue guidance.
• 17 October 2014. Tata Consultancy Services (TCS) corrected by 8.5% in a single session. The reason: disappointing revenue guidance.
• In Trump's first month as president, Infosys and TCS corrected by 8% and 7% respectively. The reason: prospects of disappointing revenue guidance.

 Do you see a pattern?

The recent correction of IT majors, though substantial, is nothing new for the sector. Nor is the reason for the correction.

The world is speculating on a Trump crash. So naturally, every correction to Indian IT is branded as a fallout from the Trump crash.

But is this so-called Trump crash a reason to act on Indian IT stocks? Of course, the answer does not depend only on stock prices. Other factors are relevant.

So we put three key questions to our in-house IT sector expert. Incidentally, they're the same three questions we asked in 2013 and 2014.

Is the business model affected? The immigration bill seeks to double the minimum salary for IT hires to US$1,30,000 from the current US$60,000. It also seeks to make a master's degree compulsory, among other requirements. And of course, the cost of the visa would go up.

Now, unlike what Trump would like to believe, Indian IT firms are no longer just back-offices to the world. Higher-value contracts have been critical to companies for several years now. And changing the mix of employees to comply with the requirements does no permanent damage to their business model.

Can the risk be hedged? Companies would need to adopt various counter measures, like hiring more locals, getting more work done from India or other offshore locations, cutting down on low-margin clients, and stepping up automation.

None of this is impossible to execute. And if done with long-term interests in mind, the onetime effort may be well worth it. So perhaps what some now perceive as a negative development will actually be a boon for certain Indian IT players.

What's the actual impact on fundamentals? If passed into law, the bill would put pressure on Indian IT firm margins inFY18. The actual impact, however, may differ from company to company. Several of them have reduced their exposure to the US in recent years. And even the companies that would hit hardest likely have enough cash on their books to recover from the shock.

Indian IT companies will need to rise to Trump's challenges. But fortunately, most were already gearing up for this. Trump may have only accelerated their defence.

So as long as you aren't worried about the revenue guidance in the coming quarters, you need to do just one thing: Stay vigil on valuations.

And you never know, the Trump crash may be an opportunity to act on not just IT but lots of other safe stocks as well.

Chart of the Day  

Large Indian IT companies, on an average generate more than 50% of their revenues from the US clients. They have built a strong client base over the years in the US market. If the suggested changes for immigration get cleared, the cost component for the Indian IT companies will go up. The need to reduce their US exposure and move to other geographies is a given.

Will Trump Mania Impact IT Companies Revenues from US?

But we believe that it is unlikely that the companies will substantially bring down their focus on the US. Instead companies may look out for other means to reduce costs or protect margins.

If you have been with us for long, you know that we have played the gentleman's game of value investing...and we have a solid track record of success there.

But you pay a price for this gentlemanly approach to investing. You have to patiently wait for the bulls to come to you. And you have to let go of many fast, raging bulls.

 Substantial part of the of central government expenditures are undertaken by state and local governments. Most states in India like the Centre run budgets where expenditure is higher than revenue, leading to deficits.

As reported in today's Business Standard, the fiscal responsibility and budget management (FRBM) review committee believes India's debt to GDP ratio will be 60% in 2023. This comprises 40% for the Centre and the balance 20% for state governments. As per the current available data, the outstanding debt positions of the Centre and state governments show the combined liabilities at 69.5%.

So containing this burgeoning debt is certainly a tall task for the government.

Generally, when the country's growth is soaring, some portions of debt is reduced. But that is nit excatly the case for FY17-18. The economy may continue to see impact of demonetization for months to come. Thus the nominal GDP growth may actually be much lesser than the projected11.75%.

The Budget has laid down large allocations towards social welfare. But it is important for the government to realize that while public spending is necessary, it will be important to keep its borrowings in check. Even the RBI has warned the government about this. 

In the meanwhile, after opening the day on a flat note, the Indian share markets have continued to trade on a weak note and are trading marginally below the dotted line. Sectoral indices are trading on a mixed note with stocks in the pharma sector and realty sector witnessing maximum buying interest. Auto stocks are trading in the red. 

At the time of writing, the BSE Sensex was trading down 68 points (down 0.2%) and the NSE Nifty was trading down 24 points (down 0.3%). BSE Mid Cap index was trading up by 0.6%, while the BSE Small Cap index was trading up by 0.8%.

 Investing mantra  

"Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a fly epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497". - Warren Buffett

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How Valuable Is the Data Economy with SAAS - B2B

How Valuable Is the Data Economy with SAAS - B2B

   June 25, 2014       prabhakardalvi

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In business, data has quickly gone from being a mere asset to being a potential revenue stream—a substantial one. The result: a burgeoning market for data. Capturing its scope and opportunity, though, isn’t easy.

Like other financial assets, data can be created, accessed, traded, transferred and monetized. For this reason, it’s increasingly being viewed as a commodity. Unlike other commodities, though, its value is “TBD.”

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"When people say data is a commodity, it's because they see statistics about huge pools of data out there," says Randy Giusto, an analyst with Outsell Inc., a research and advisory firm focused on media, information and technology. "It feels like a commodity because of the huge number of companies in this space.” However, estimates on the actual value of that commodity can be tough to pin down.

The Data-Value Disparity 

For example, last year, a data analytics company serving the auto industry used software code to track websites visited by consumers. Using a technique called “history sniffing,” the data company tracked user browsing histories. It transferred the data—400,000 consumer names, phone numbers, e-mail addresses and vehicle preferences—to a data broker for a mere $2,500 payoff (which would eventually go to a $400,000 settlement to the State of New Jersey, since “history sniffing” is illegal).

On the flip side, a survey of large companies last year, conducted by Tata Consultancy Services (TCS), found that those selling their digitized data earned, on average, a hefty $21.6 million in 2012. The survey also revealed that telecoms and utilities, in particular, are likely to monetize their data, while insurance companies get the biggest return.

Getting a true handle on the value of data as a commodity is made even more difficult because most data isn't sold: TCS discovered that only 27% of its survey respondents were selling their digitized data (though that number is expected to jump to 43% by 2015). Plenty of companies still barter their data, swapping with other companies to mutual advantage—something not considered in most valuations of the data economy.

Where the Growth is

So for many companies right now, the core of the data economy is a small but growing segment—the information two billion-plus global Internet users create when they click "like" on a social media page or take action online. Digital customer tracking—the selling of “digital footprints” (the trail of information consumers leave behind each time they surf the Web)—is now a $3 billion segment, according to a May 2014 Outsell report. At the moment, that's tiny compared to the monetary value of traditional market research such as surveys, forecasting and trend analysis. But digital customer tracking "is where the excitement and growth is," says Giusto.

Real-time data that measures actions consumers are actually taking has more value than study results that rely on consumer opinions. Not surprising, businesses are willing to pay more for activity-based data.

Striking it Richer

Outsell Inc.'s analyst Chuck Richard notes that the specificity of data has a huge affect on its value. In days past, companies would sell names, phone numbers, and email addresses as sales leads. Now, data buyers have upped the ante. They want richer data—names of consumers whose current "buying intent" has been analyzed through behavioral analytics. Beyond the “who,” companies want the “what” and “when” of purchases, along with “how” best to engage with prospects.

"Some companies are getting a tenfold premium for data that is very focused and detailed," Richard says. "For example, if you had a list of all the heart specialists in one region, that’s worth a lot."

Tapping into New Veins

Moving forward, marketers will increasingly value datasets that they can identify, curate and exploit. New technology could increase the value of data by gleaning insights from unstructured data (video, email and other non-traditional data sources); crowdsourcing and social media could generate new types of shareable data; predictive modeling and machine learning could find new patterns in data, increasing the value of different types of data.

Given all this, the data economy is sure to keep growing, as companies tap into new veins of ever-richer and more-specific data.

NARRATIVES by WSJ. Custom Studios for SAS

The Guest Post Blogger organization was not involved in the creation of this content.

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