Despite there being expectations of a couple of positive developments on the counter, HCL Tech has remained subdued following a general downturn in the technology sector. 

At Rs 163.80, while the HCL Tech stock trades nearly 11 per cent over its 52-week low of Rs 147.80 touched in intra-day trades on 27 January 2003, it trades at a substantial 45.14 per cent below its 52-week high of Rs 298.60 touched on 11 March 2002.

The HCL Tech counter has not surged in the recent past despite reports of the HCL group joint venture company HCL Perot bagging a Rs 100-crore contract from UK's largest electronic funds transfer bank BACS.

Reports also mentioned the possibility of an even bigger deal with an American insurance company is in the pipeline.

The recent weakness on the HCL Tech counter is partly attributed to the fears of an imminent US-Iraq confrontation.

The BSE IT Sector Index has lost 14.47 per cent in the calendar year 2003 so far to 1,435.78 on 14 February 2003 from 1,678.86 on 31 December 2002 amid the rising fears of war.

A full-scale war is likely to affect the US economy, which is struggling to recover. A further slowdown in the US economy would affect the Indian tech sector, which derives around 60 per cent of its revenues from the US.

Last month, HCL Tech announced disappointing second quarter ended 31 December 2002 results - a 34.6 per cent fall in net profit to Rs 80.59 crore compared to Rs 123.22 crore in the corresponding period of the previous year. Revenues increased 16.6 per cent to Rs 467.93 crore in DQ 2002 from Rs 401.26 crore in DQ 2001.

Deutsche Bank Equity research retained its 'buy' rating on the company's scrip saying that the second quarter numbers were in line with expectations.

According to the Deutsche Bank report, "The shortfall in the core business is being made up by better-than-expected performance for DSL (a JV) and business process outsourcing (BPO) initiatives. Strong hiring for the second consecutive quarter and improving order flow indicate the revenue growth should be sustained, helping arrest margin decline to a large extent."

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