IT : The Doubtful Darlings; The top three IT companies are still among the 10 most valuable companies in India, but D-Street's appetite for IT stocks in general seems to be on the wane

It's a state of affairs that the IT industry would not have imagined it would be in, less than a year ago. For the first time in nearly a decade-and-a-half, the industry finds that it has become a 'contrarian industry'--an industry that analysts expect to do well when the rest of the market is down. An industry instead of being the catalyst of bull runs (like it has been in the past), is now a laggard as stocks of most other industries zip ahead. At the time of writing, industry 'bellwether' Infosys Technologies bumped to its 52-week low of Rs 1,534. Like a Mumbai-based analyst says: "If you predicted that Infosys would breach the Rs 2,000-mark two years ago, people would have laughed you off. But now that it's below Rs 1,600, anything seems possible." TCS CFO S. Mahalingam, for one, is looking beyond just dealing with the vagaries of the dollar, which some alarmists believe will touch the Rs 35 mark in the foreseeable future. "I don't think it will go to or below Rs 35 ...I think things will settle around Rs 38, but the hypothetical question is this--can I still manage at a hypothetical situation of Rs 35 per dollar?" muses Mahalingam. There has been some speculation that the IT industry operated with reasonable success in the Rs 35 per dollar band less than a decade ago--a feat some consider repeatable. But Mahalingam dismisses that idea contending that the cost structure of the industry (read: wages) has changed considerably. The key, according to Mahalingam, is greater focus on cost and revenue management. "I have to admit that life, so far, has been very easy. So, we have all operated with a degree of inefficiency which we have condoned because there was always the depreciating rupee that took care of things," says Mahalingam. "In fact, I would keep saying jokingly that it helps us to be inefficient in billing and collections because if you postponed it, the rupee depreciation took care of things and at times, even gave you a gain. Now we don't have that luxury." Having said that, is this the end of the "sunrise industry" days for it? Will a rupee on steroids and a recession in the US garrotte the investor's love affair with the IT stocks? The industry itself does not believe so. Says Suresh Senapaty, CFO, Wipro: "it is among the most aggressive sectors when it comes to rewarding its investors, and despite the recent hurdles Wipro and the others continue to be the trend-setters." Analysts like Suveer Chainani, who is a technology analyst for Macquarie