Indian stocks Market :BSE Sensex: Nifty

The Indian stocks continue to be under tremendous selling pressure in late morning trade, as investors continue to flee risky assets like equities and commodities in the wake of the S&P's decision to downgrade US' "AAA" rating by one notch.

All the sectoral indices were in the red and the benchmarks slipped to crucial support levels."The S&P on Friday downgraded the long-term debt rating of the US from AAA to AA+ and continued with its negative outlook. This could lead to some immediate turbulence in financial markets, however, investors are likely to focus on 'relative' ratings in their investment decisions.

The BSE Sensex is down more than 450 points while the NSE Nifty remains below the 5,100 mark.

The BSE Sensex was trading at 16,848, down 457 points or 2.65% over the last close. It had touched the day's high at 16,907 and day's low at 16,759 with the opening of Rs. 16,907.

The NSE Nifty on the other hand was quoting 5,075, down 135 points or 2.61% after touching a high of 5,096 and a low of 5,054.

The IT index on the BSE is down more than 5% amid concerns that a weakening economic landscape in the US and Europe will hit their earnings, which are closely  linked to these markets.

The ADAG pack is also being pummeled out of shape, led by heavy losses in Reliance Power, RCOM, Reliance Infrastructure and Reliance  Capital after the BSE removed RCOM and Reliance Infra from the Sensex effective today.

Cognizant performance is great

Cognizant's growth and its rise to the No. 3 spot among IT services providers in India is viewed by some as exceptional. The fact is, it is exceptional compared to the two laggards in the business -- Wipro and Infosys. But compare it with TCS, HCL, and the more recent performances of midsize companies like Hexaware and KPIT Cummins, and you will find that Cognizant is only as good as the best.

Even in the latest quarter, TCS and Cognizant's revenue growth was the same; TCS's profit growth was faster. While Cognizant's revenues have grown faster than HCL, it lags HCL in profit growth.

Ankur Rudra, IT analyst at brokerage firm Ambit Capital, said that Cognizant's relatively nimble organization structure and larger investments in sales and marketing must be credited for its fast growth. "It keeps its margins low and continues investing in sales - it did that even during the recession -- which has enabled it to build good client relationships and grow fast."

But margins can only be a partial explanation because companies like TCS and HCL that maintain higher margins have also been able to maintain industry leading growth.

An industry analyst who did not want to be named said the timing of Cognizant's growth over the last 2-3 years has added sheen to its strong financial performance. It came at a time when Infosys and Wipro were undergoing restructuring exercises that slowed their growth.

Cognizant has also benefited from its huge focus on the banking, financial services and insurance (BFSI) space, which accounts for over 40% of its revenues, unlike a Wipro that has only 26% of its revenues from the segment. Srishti Anand, IT sector analyst at Angel Broking, said that the IT sector growth in recent times has been led by spends from the BFSI vertical.

But some of these very factors could become its Achilles heel. The dependence on BFSI could become a liability if the sector slows down, and there are signs of that already in the global economy. Unlike its peers, Cognizant has no presence in product engineering services (PES) that now contributes significantly to the revenues of companies like Wipro and HCL.

Huge number of Indian youth remain unemployable !

Rapid economic growth in the country is expected to generate 10-15 million jobs by next year but lack of suitable skilled candidates poses a major threat, a leading industry lobby said Sunday.

'Approximately 10 to 15 million jobs are expected to be created by next year, in which 75 percent will require vocational training. If not addressed properly it can lead to a slowdown in the country's economic growth,' said a report by the Associated Chambers of Commerce and Industry of India (Assocham).

According to the report, the principal reason behind India's growth is its youth force, the largest in the world. However, millions of young Indians are jobless because they do not receive proper vocational training.

'The huge numbers of Indian youth are not only unemployed but unemployable, whereas large numbers of white collar jobs are waiting for suitable candidates,' the report said.

It further said that though 90 percent of jobs in sectors like information technology (IT) and IT Enabled Services (ITES), biotechnology and the services sector are skill-based and require training, only six percent of the total workforce receive such training.

The report also predicted that 2011 will be a boom year for the IT & ITES sector, accompanied by a corresponding rise in salaries.

'The year 2011 is likely to be a boom for skilled workers in IT & ITES, biotechnology and services sectors. As against the 15 percent hike in salaries in 2010, it is expected to be registering 30 to 40 percent growth,' Assocham secretary general D.S. Rawat said.

Currently, IT and ITES industry alone provides direct employment to about 2.23 million people and indirect employment to a further eight million.

The report added that this sector in particular will experience a shortage of skilled manpower.

'The employers are trying to catch the highly skilled manpower and the salaries are going through the roof. It is expected that the salaries in this sector will be growing at a par of 30-40 percent during the year 2011,' the Assocham report added.