Indian IT industry to help in US economic recovery

India's information technology industry should start hiring in the US to help in its economic recovery as the US is always going to be its biggest market, the industry association's head has suggested.

The restrictions on H1B visas in the US "absolutely is a concern," Pramod Bhasin, president and chief executive of outsourcing firm Genpact and the new chairman of the National Association of Software and Services Companies (Nasscom), said in an interview with Forbes Asia.

"We've met the concerned people in Washington and expressed our views. Any abuse of the visa system must be stopped, and Nasscom will help to do that," he said.

"That said, I believe that we should be hiring in the US and thereby participate in its economic recovery," Bhasin was quoted as saying. "Several of our companies are already looking to create employment in the US It's the ideal time to get the best talent."

Asked about Nasscom's strategy to address the protectionist wave in the US, Bhasin said there's a lot of protectionist noise today, but the Indian industry "should respond to the reality, not the rhetoric."

"American companies are not going to turn away from global intellectual capital. The US is always going to be our biggest market," he said.

Calling backlash against outsourcing due to layoffs around the world as "a big issue that we're facing," Bhasin said Indian "industry isn't responsible for these layoffs, which have been caused by other factors."

"We're working with governments around the world to make ourselves heard. We bring real value to global companies, and it would only hurt them if they dispensed with our services," he said.

Asked about the industry outlook for this year, Bhasin said last October they had estimated an annual growth of 13 percent over the next two years after ending the last fiscal year with an overall increase of 16 percent. But that's "no longer achievable."

"Although we expect to grow at a lower pace this year, our sector will still outgrow other sectors," despite the recession as "the fundamental premise of our business remains unchanged," he said.

"We see ourselves as part of the solution to the global recession," Bhasin said noting "that ours is still a small industry; our biggest firm has revenues of only $6 billion. We still have a lot of runway ahead."

Markets rise to polls, may falter later

The stock market gets election fever too. The mercury rises on theexchanges in the run-up to the elections, and drops just as sharply after the process is complete, according to Mumbai-based brokerage KR Choksey Securities. 

However , local market movements will not defy international trends under any circumstances. This time round, says the brokerage, watch how the market starts moving up from March 23 — the polls begin on April 16 — and how it falls from May 6, a week before polling ends in most constituencies. 

The firm has analysed the  generalelections of 1996, 1998, 1999 and 2004. According to its report, 25 days before the elections, the Sensex gained an average of 8.8% and dropped by 28.8% in the 20 days following the elections. 

Punters prefer BJP or Congress-led  governments. VK Sharma, director of Ahmedabad-based Anagram Stock Broking told ET: “If the Left parties or Mayawati appear to play a predominant role in the government, the markets will react bitterly.” 

He adds that if international markets show signs of recovery, domestic markets will “discount all negative (political) news and move upwards.” 

Says DD Sharma, research head at the Mumbaibased Anand Rathi Securities , “If a BJP or Congress-led alliance comes into power, we may see a rally of about a 1000 points in the Nifty. But if we see the Third Front in the driver’s seat, markets may touch the previous low. However, all these projections are valid only for the short term. In the medium-to-long term, global movements will prevail.” 

Mr Sharma believes markets and elections may show a clearer correlation in the later stages, when the election survey and speculations start pouring in. 

Angel Stock Broking, which has also presented a report to clients on the likely scenario, post-elections , says the only concern for the markets may be a Left-led government at the Centre.

Market may correct 15% post election

MUMBAI: Over the next 6-8 weeks, Merrill Lynch expects concerns of a hung Parliament post-election and expected slowing in corporate earnings will likely worry the market. “We believe this could lead to a 15% correction in the markets,” the investment bank says in a report. 

On the elections, the brokerage believes (a) there will likely be a hung Parliament i.e. none of the three combinations - Congress-led UPA, BJP-led NDA and the Third Front - will be able to come to power (b) post-election results new alliances are likely -regional parties like BSP and AIADMK will be important (c) the probability of a Third Front government coming to power is still low but increasing in its view. 

“Our best case scenario would be a Congress government but with the Left being a key ally in it,” it adds. 

According to ML, most of the present alliances are fluid and many parties would be willing to reconsider their alliances post-elections. “We think 2 regional parties - Mayawati’s BSP and Jayalalita’s AIADMK would play a crucial role in deciding the Government. The role of the Left parties, though weakened, should also be important,” ML says. 

Despite the break-down of seat sharing with Mulayam Singh’s SP in Uttar Pradesh and Laloo Yadav’s RJD in Bihar, ML thinks both will continue to be part of the Congress-led UPA. The investment bank thinks the UPA still has a slight edge since they can get Left support again. The BJP-led NDA, on the other hand, could need the support of BSP, Jayalalita’s AIADMK, Naidu’s TDP as well as its old ally BJD