Jan 2008 – Sub prime crisis in full swing, Rupee looked likely to appreciate (due to dollar weakness) , US on the edge of recession due to housing market collapse and high oil prices etc. IT companies were at an all time low
For ex: Infosys was selling between 1300-1400
May 2008 – Not much has changed in terms of fundamentals except that rupee has depreciated by 5-6 % (??!!) driving up inflation. The US economy has not gone into recession (yet !). Oil is now 125 USD+ and the future outlook seems to be as cloudy as ever (when is it ever completely clear ?)
So ….infosys is now selling at 2000+ (it jumped by 8% in US today). Other IT companies have increased by 50%+ too.
I will not try to explain why this is happening. My logic is as good as anyone's guess. You will soon find enough articles trying to explain the unexplainable or the irrational. Why even icici direct is now recommending NIIT tech :) …they have a target price of 180+ in the next six months. I think I will sell everything I have, and just buy this company for a sure 20% :)
Anyway, I am currently analyzing BEL (bharat electronics limited) and SRF and will be posting on them soon.