There are reasons to believe that these companies can repeat capitalisation of reserves in the coming months. The stupendous growth in earnings by these software companies makes it easier for them to reward shareholders by capitalising reserves, which have been rising thick and fast with the growth in bottomline. The 100 per cent-plus growth in earnings witnessed by these companies in the past couple of years has boosted reserves substantially. Further, with no equity dilution in several cases, it has boosted the book value substantially, thereby making them ripe forbonus announcement.

Infosys has already announced its second bonus in two years, NIIT after a 1:2 bonus in three years is trading cum-bonus and others like Satyam Computers, Wipro and Aptech could be the next in the list. Pentafour is also being tipped as another bonus candidate.

Although Aptech has already announced bonus in 1998, the growth in its earnings makes it a strong candidate for a repeat bonus. Aptech's equity stands at Rs 5.58 crore against huge reserves of over Rs 42 crore. Reserves in case of Leading Edge stand at Rs 21 crore with a low equity of Rs 6.28 crore.

Pentafour's equity stands at Rs 17.04 crore while reserves are at Rs 243 crore, thus yielding a high book value of Rs 153. Further, the company has already reported a net profit of Rs 43 crore for the first half against Rs 68 crore for the full year ended march 1998, which has the potential to boost the company's reserves close to the Rs 300 crore mark.

Wipro too has been liberal with bonus announcements and has capitalised itsreserves six times in the past 11 years with the latest one in 1997 in the ratio of two shares for every one share held. Even after frequent bonus issues, the company's equity stands at Rs 45.83 crore and reserves at Rs 270 crore. This gives a strong book value of Rs 71. Leading Edge has already announced a 1:1 bonus this year and relatively small companies like IIS Infotech, Software Solutions and Infotech Enterprises with small equity may announce a bonus.

Led by Infosys Technologies, the software stocks have bounced back. After a quiet spell of almost three months, the software stocks ahead of their third quarter results have surged and have yet again outperformed the market. Ahead of the third quarter results, the market is yet again looking forward to a sterling performance from the software companies. The investors have been quick to log in to these stocks to reap a windfall.

Apart from expectations of exceptional growth in earnings, the overall revival in the market sentiment coupled with companyspecific factors have renewed interest at software counters. The software sector is expected to repeat its past performance with an average growth in earnings of around 80-120 per cent. For instance, for the half-year ended September, 1998, Infosys reported a 126 per cent jump in net profit to Rs 52 crore on a 103 per cent improvement in turnover.

A few companies have already announced their board meeting dates to take up the third quarter results. The boards of DSQ Software and BFL Sofware are scheduled to take up the quarterly results on January 8, 1999.

NIIT has been on the rise and during the past two months, has risen from 1193 to the current level of Rs 1530. The announcement of a 1:2 bonus coupled with the hike in the FII investment ceiling to 30 per cent has further aided the rally in the stock. DSQ Software is yet another stock which has been on the rise and the takeover speculation has seen the scrip rising from a low of Rs 227 to the current level of Rs 320. There has been intense speculationat the counter that the promoters are likely to sell a part of their stake to some foreign company. ING Barrings, which also took over BFL Software, is again being tipped as a front-runner.