Rajendran told The Financial Express that the IT stocks rally on the bourses is related to the strong fundamentals. Despite the general recession in the economy, the IT companies are showing phenomenal growth. The financial results of the infotech companies have contributed to the rally of the stock prices, he pointed out.

Rajendran, who is also a director of NIIT, said that the stock price rise is also in line with the changing trend in the developed markets of Europe and the US. The software stocks command high valuations worldwide and India cannot be an exception, he asserted.

The top ten IT stocks today account for nearly eight per cent of the total market capitalisation of over Rs 5 lakh crore of all the listed companies to the Bombay Stock Exchange (BSE). A year ago, they accounted for just1.7 per cent. NIIT is the third largest software stock with a market capitalisation of Rs 5494 crore after Wipro (Rs 1600 crore) and Infosys (Rs 7866 crore).NIIT has earned the distinction of becoming the first Indian IT company to post a net profit of more than Rs 100 crore. Last year (October 1, 1997 to September 30, 1998), NIIT posted a net profit of Rs 108 crore on a total turnover of Rs 648 crore. While the software and computer education business constituted 40 per cent each to the revenue, the education multimedia contributed about 20 per cent. NIIT has set an internal business target of Rs 850 to 900 crore during the current year expecting that the growth rate would be 35 to 40 per cent.

The company's profit would increase by 30 to 35 per cent, company vice-president Sanjiv Kataria said. NIIT would focus on its core business -- creating of learning materials, Kataria said. The company has already created 269 titles and is now proposing to produce cyberspace-oriented learning materials.

Katariasaid that NIIT has bagged a $10 million contract from US-based National Education & Training Group (NETG), one of the largest computer training provider of the world for creation of learning materials.NIIT on Wednesday launched a major initiative to partner the IT-led transformation in Orissa by setting up its centre for advanced technology studies (CATS) and Bhubaneswar regional office.