The overall hammering in the market towards the fag-end of the session saw the stock ending the day at Rs 2500, down 5 per cent from Thursday's close of Rs 2631.65. As many as 7 lakh shares changed hands. The stock has been on the roll for past few trading sessions. The company's upgradation as a IT solutions partner for Deutsche Bank gave the initial fillip, which is now being fanned by bonus rumours.

Although there has been no communication from the company yet, marketmen say a bonus issue of shares is likely. The recent private placement to a clutch of investment bankers has seen DSQ Software's share premium reserve go up by over Rs 200 crore. On the expanded equity of Rs 30 crore, the reserves stand at over Rs 300 crore, thereby justifying capitalisation for a bonus issue of shares. However, analysts say the market might be in for a disappointment as a large chunk of money raised through the private placement could be used to pay the dues owed to financial institutions.

DSQ Software's preferential issue, of one crore shares at Rs 275 per share, saw Bankamerica International picking up 20 lakh shares, Credit Suisse First Boston 30 lakh shares, Empire International Holdings 11 lakh shares, Classic Credit 9 lakh shares among others. The nine new investors hold around 33 per cent stake in the company. Post-issue, DSQ's paid-up equity has increased to Rs 30.25 crore from Rs 20.25 crore. The company's board has given its nod for another placement of around 30 lakh shares. Analysts are of the view that the surge in the stock is in anticipation of the strategic sale of equity.

DSQ Software has been chosen as Deutsche Bank's global IT solutions partner and, consequent to this deal, the former will service the latter's IT needs in Germany, UK and the US. Apart from adding to DSQ Software's coffers, this deal will broad-base the company's geographical revenue profile. Yet another push for the stock price should come from the launch of DSQ's Internet arm - DSQWorld.com.

With a slew of good news it is not surprising, therefore, that DSQ Software has been the fancy of marketmen in the last few sessions. The DSQ stock has risen sharply from its March 1 level of Rs 1780 to the current price of Rs 2800, an appreciation of over 60 per cent in eight days. The current market price of Rs 2500 discounts the first-half earnings of Rs 10.57 by a multiple of 236.5.

In the first-half of FY 2000, the company has earned an income of Rs 110.42 crore and a net profit of Rs 15.99 crore - much of which has come in the second-quarter. With the repayment of dues, the company's bottomline is likely to bloat substantially in the full-year 1999-2000. In case, DSQ announces a bonus issue, it will be a first for the company.