Hinduja TMT surged for the second day running amid expectations that mutual fund Alliance may increase its exposure to the stock.

The scrip of the ITES major leaped up 7% to Rs 237.50 on BSE in early trades on Tuesday, but had already moved lower from the day's high of Rs 242.50 at that juncture. Around 700,000 Hinduja TMT shares were traded on BSE in just a few minutes.

An Alliance favourite, Hinduja TMT surged by its maximum permissible level of 20% to Rs 222.10 on Monday. The much-battered (of late) scrip got a boost from the announcement by the US-based Alliance Capital that it has decided against pulling out its 75% stake in Indian mutual fund venture Alliance Capital Mutual Fund, after a strategic review.

The stock was earlier much beaten down as was the case with most other ACMF favouites like United Phosphorous, Digital GlobalSoft and Polaris Software. This, on media reports that Alliance Capital was on the verge of exiting its Indian unit in favour of HDFC Mutual Fund.

However, now that Alliance is not quitting India, there are expectations that ACMF may step up buying in Hinduja TMT. Earlier, ACMF was reported to have pruned its exposure to Hinduja TMT.

For Q3 ended 31 December 2002, Hinduja TMT posted a 26% rise in net profit to Rs 16.51 crore compared to a net profit of Rs 13.10 crore in the quarter ended 31 December 2001. Total income rose by 46.8% to Rs 29.60 crore. At the time of announcing its Q3 results, Hinduja TMT said that in order to manage risks posed by the external environment and meet the requirements of its overseas clients for geographical diversity and disaster recovery, it has entered into an agreement with a call centre company in the Philippines and is providing such services for its clients with effect from 15 November 2002.

Hinduja TMT, as part of its IT/BPO portfolio, is also focusing on high-end applications like engineering design and R&D services. It has successfully completed pilots in engineering design software services for two companies in Europe - an automobile major and an engineering services company - and regular orders are likely to flow from them for onsite and offshore services.

The Securities & Exchange Board of India has issued an order directing Hinduja TMT not to deal in securities as an intermediary in any manner whatsoever for a period of two years. However, the Sebi ruling will not have any impact on the company, as it has already transformed itself to an IT-enabled services and media company in the last couple of years from a finance company. It has already surrendered its non-banking financial company  registration to the Reserve Bank of India and plans to focus only on its new activities. The company had consolidated the Hinduja group's telecom and media businesses earlier, and as reflected by its new name, has positioned itself as a full-fledged TMT (technology, media and telecom) company.