TCS disappoints ....

TCS dropped nearly eleven percent on Tuesday, the highest loss in terms of percentage since it began trading. Disappointing fourth quarter results lead to this.

Financial results can be found here. The profits dropped six percent on a quarter on quarter basis. Profits showed a small increase of four percent on a yearly basis.

TCS earns more than fifty percent of its revenue from North American clients, difficult conditions and an appreciating rupee puts a strain on the margins. TCS still earns more than 44 percent of its revenue from services provided to the Banking and the Financial Industry.

TCS lead a crash of the technology stocks on the BSE sensex with the BSE IT index losing 4 percent; the broader markets posted a gain of a mere 44 points. Infy dropped more than 2.5 percent, HCL systems lost 4.5 percent, Wipro lost more than 4 percent, Tech Mahindra lost more than 4 percent. I own at least a few stocks of each of these companies. After the Infy results, my portfolio suddenly started to look a lot better after the IT stocks started to pick up. Now they have again gone southwards.

Time to Cheer and Buy?

The US stock markets are pleased with better than expected earnings from Lehman Brothers. This is despite the fact that it has taken a hit of $1.8 billion. It has also assured investors that its not facing a crisis like Bear Stearns and is not insolvent.

The crisis at Bear Stearns also didn’t seem huge when it reported a loss of $854 million on January 8. The Fed for sure is taking steps to ease liquidity with UBS advocating a 100bps rate cut for things to smoothen out. But it should really be also taking care to prevent such liquidity crisis from happening again.

Our Indian stock markets will surely rally tomorrow based on positive cues from the US. Even though this is a thin ray of hope. So do we go out and buy the fundamentally attractive looking stocks? Yes wise men have always said - Buy on dips. But I guess the trend is negative and there is more to come. The subprime mess in the US is going to take some untangling. So we better be vigilant with all the data coming out of the US and not get foolhardy.