Pentafour Software is down 45 per cent, CMC is down 33 per cent and NIIT at Rs 1311 is trading well below its May-June high of Rs 1,700. DSQ Software and Digital are trading at a 20 per cent discount to their May-June highs.There have been contrarians too. Scrips like BFL Software, Tata Elxsi and Rolta India are actually trading much above their May-June levels. The open offer by Barings India infused a new life into the BFL Software scrip, which has zoomed from Rs 55 in February to the current level of around Rs 500.

There are reasons to believe that many of these stocks are ripe for picking. One, they have already lost substantial value and failed to reach close to previous highs. The secondquarter or the first half results are round the corner and the growth in earning is unlikely to slow down. The information technology sector is certainly one of the few sectors which has wethered the storm in the past two years while others have struggled and failed to maintain their profitability levels. The chances of appreciation in these stocks is much higher due to the high growth in earnings which will progressively bring down the discounting and thus keep the stock attractive.

Most of the software stocks lost their sheen in the past few weeks as they provided an opportunity to fund managers to book profits. IT stocks like NIIT, Infosys, Stayam and NIIT had risen substantially in the past two years mainly due to high growth rates and high return on capital.

A number of stocks have already shown signs of improvement in the past few sessions. Stock like Infosys, NIIT, Pentafour, Satyam Computers, HCL Infosystems and Digital Equipment have shown appreciation in prices.

Leading Edge is currentlytrading at a cum-bonus price of Rs 674 and is already down 25 per cent from its high of Rs 894 scaled in May this year.

The stats owned CMC is currently trading at Rs 193, down from its peak of Rs 292 despite a 162 per cent sput in first quarter net.

HCL Infosystems before entering the no-delivery period attracted huge trading volumes. HCL Infosystem's net profit zoomed by over 400 per cent for the year ended June 1998. A year after breaking-up with Hewlett Packard, HCL Infosystems reported an exceptional growth in earnings from Rs 5.1 crore to Rs 26 crore with a new business strategy.

The company has formulated a change in the business model which is in the process of transforming the company from a pure hardware manufacturer into application of software solutions and providing end-to-end solutions as well as technology integration.

Digital Equipment, which has finished 10th year of operation in the country and is placed second in PC server sales and among the top five in desk top sales, recorded aPAT of Rs 27.4 crore, an increase of 8.5 per cent over the previous year. Digital's income also rose to Rs 353.8 crore, an increase of 25 per cent over the previous year's figure of Rs 284.1 crore.

After the announcement of the Compaq-Digital merger, Digital Equipment's stock price has gained almost 50 per cent, and after shooting to around Rs 150 is now currently trading around Rs 140.