One time favourites, software stocks have temporaririly lost favour from the market operators who have dumped them in the past few days. The market has been concentrating on the index heavyweights and other traditional pivotals and the software stocks have been more or less ignored.

But for the contrarians, a drop in the software values coupled with excellent first half performance has made the stockvaluation of these software companise very attractive. For a discerning investor, this may just be the right time to pick these software stocks who have lost in the range of 5 per cent to 50 per cent. These companies are likely to sustain the growth rates reported in the recent past and the sentiment in these counters could change very soon.

But for Onward Technologies, 24 companies in our sample of 25 software companies have reported an excellent growth in earnings. At least six companies have more doubled their net profit and another 12 have shown an improvement fo over 50 per cent in their bottomline. HCL Infosystems has been the top performemer and its net profit for the first quarter ended September 1998 has zoomed by around 530 per cent or 5.3 times to Rs 12.52 crore, up from Rs 2.02 crore in the corresponding quarter of last year.

BFL Software and Tata Elxsi too have shown an impressive growth of over 322 per cent and 270 per cent respectively. BFL Software, after the take over by ING barings, hasreported a sharp jump in net profit for the first half ended September 1998 from Rs 2.65 crore to Rs 11.2 crore. A low equity of Rs 9.32 crore yields a high earning per share of over Rs 24 and the current market price of Rs 494 discounts the latest EPS by a price earning multiple of just over 20. The scrip has already dropped from the September high of Rs 629.

At a time when the BSE-30 share index has dropped by just under 11 per cent, most of the software stocks have not been able to outperform the index and have witnessed a much sharper fall in values. Among the 25 software companies considered, only five companies have seen a fall of less than the BSe sensex fall of 10.57 per cent over the September-October high.

Scrips of some of the bigger software companies like Satyam Computers, Infosys, DSQ Software, Tata Infotech, Wipro and Software Solutions have seen only a drop of around 10 per cent from their peak in the past two months.Zenith Computers, Unicorp Industries and CMC Limited have been the worsthit with their scrips tumbling by over 35 per cent over their respective peaks attained in September-October this year. Mastek Limied and Onward Technologies have sailed against the wave and have risen further over their peak recorded in September-October.