Share indices September 09

(By Richard Holway 9.00am Thurs 1st Oct 09) The financial headlines this morning might frighten you. The FTSE100 has just produced the best quarterly rise – up 20.8% - in its 25 year history. The previous best quarterly rise was the three months up to the bursting of the dot.com bubble in Q4 1999.

Earlier this year I started to warn that the UK FTSE SCS Index (indeed every other Tech indices) was getting seriously out of line with the FTSE100. Over every ‘medium’ period of time since I became an ‘analyst’ in 1986, the FTSE SCS has aligned with the FTSE100 – eventually. It became seriously ‘un-aligned’ in the dot.com boom but re-aligned over the following couple of years.

The first half of 2009 saw the FTSE SCS rise by 34% against a 4% decline in the FTSE100. At that time I suggested that either the FTSE SCS would slump or the FTSE100 would rise to catch up. The FTSE100 did, as I noted above, produce a record rise of 20.8% in Q3 BUT the FTSE SCS rose still further by an even higher 23%.

So, we are now in an unprecedented position of reporting a FTSE SCS rise of 65% YTD compared with a 16% rise in the FTSE 100. Be scared. Be very scared.

September saw a 10.6% rise in the FTSE SCS compared with a 4.6% rise in the FTSE 100. NASDAQ continued its record rise too – 4.6% in Sept and 35% YTD.

Of the FTSE SCS Index constituents, Autonomy was the best performer in Sept – up 25% and 65% YTD. As George O’Connor said in his morning note today “Autonomy has one of the most exciting technology franchise – a good product will always out.” Computacenter also powered ahead with a 20% rise (see Computacenter winning services share) and Logica put on 13% making a massive 86% rise YTD (see Logica margin challenge). Wooden Spoon goes to MicroFocus with a 6% decline mainly occasioned by the resignation of Steve Kelly. See Microfocus – Full of Surprises.

Outside the UK, it will come as no surprise that Perot Systems was the highest riser – up 75% in the month on its takeover by Dell. See Dell, Perot try the Texas Tango. With an eye to some of our avid readers, Sopra (up 31% - see Sopra, Steria losing UK market share) and Steria (up 29% - see Steria update) also did very well.

Top gainer among the India-based SIs was iGate (+26%), with Satyam’s ADR (or more correctly, Mahindra Satyam) just tipping +20%, a shade ahead of Mphasis (I suppose we should call them HP Enterprise Services India now!). Of the majors, TCS rose 18%, Wipro (ADR), 13%, HCL 11%, with Infosys (ADR) and Cognizant up 10%. Patni rose 7%. All these therefore beat the BSE Sensex index (+8%) and Nasdaq (+5%).

In the UK outside of the FTSE SCS stocks, Parity (see Parity switches offshore partners) will be disappointed with their 26% slump; just pipped for the Wooden Spoon by MinorPlanet’s 30% fall.