MUMBAI, MARCH 30: A buoyant technology sector is expected to drive 1999-2000 (April-March) profits of the country's top firms higher but the pace of a broad-based economic recovery remains sluggish.If the expected lacklustre performance of Mahanagar Telephone Nigam Ltd (MTNL) was excluded, combined profit growth of the technology companies would have been 74 per cent and their sales growth 38 per cent.Falling tariffs are expected to keep MTNL's profit growth flat and cause a small dip in revenues. "Demand for information technology services will continue to remain strong in the next two years as more and more companies adopt e-commerce business models," said V Ramanan, research director at BNP Prime Peregrine.Technology stocks downside limited:Analysts said the downside for technology stocks was limited despite the sector's losses on Thursday, which mirrored the US Nasdaq's 4 per cent slide overnight."Indian technology stocks are backed by earnings and what you are paying for is additional growth options over and above the visible earnings," Devina Mehra, director for research at First Global brokerage, said.Leading the sector was software services firm Infosys Technologies Ltd whose profits are forecast to rise 106 per cent and sales 71 per cent on the back of booming overseas demand for services. Satyam Computer Services, with an 85 per cent expected profit growth and Global Tele-Systems, with 62 per cent, are seen as other major gainers.In the cement and automobile sectors, net profit was seen falling by 1 per cent and 12 per cent respectively but sales growth was projected at 6 per cent and 12 per cent respectively. "Many of the sectors saw strong pick-up in demand but prices did not move up because of the surplus capacities, while costs increased," said BNP's Ramanan.India's biggest truck maker, Tata Engineering and Locomotive Company Ltd, was forecast to post a loss of Rs 29.7 crore for the year compared to a net profit of Rs 97.46 crore in the previous year, while the Associated Cement Companies Ltd was expected to see its previous year's Rs 56.8 crore profit almost wiped out."The next year (2000-01) will be very strong for cement firms as they ramp up capacity utilisation to peak levels," said Vasudeo Joshi, director and head of research at HSBC Securities and Capital Market Services Pvt Ltd.The poll also projected a 42-per cent rise in net profit for HDFC Bank off the back of its strong retail thrust and a 44-per cent surge in profit for copper and telecommunications cable maker Sterlite following a boom in cable demand. State Bank of India, the country's largest commercial bank, was forecast to post a 66-per cent jump in profit but the growth was magnified because of high provisions in the previous year.
