Software major Infosys Technologies on Friday met market estimates, recording quarterly profits of Rs 1,302 crore for Q1, up 20.7% from profits of Rs 1,079 crore posted a year ago. Revenues for the quarter, at Rs 4,854 crore, were up 28.7% from Rs 3,773 crore.

The company expressed ?cautious optimism? on the back of its global delivery model (GDM) and a weakening rupee, however, adding that IT budgets were flat and the pricing stable.

Infosys chief executive & managing director S Gopalakrishnan said the global economic slowdown could impact IT spending in the short term.

?It (the business environment) is challenging. We need to be cautiously optimistic,? he said, adding that the market shift towards GDM was promising for the company. ?The IT budgets have been finalised. Very few companies are looking at increasing their IT spends. IT services companies like us will get momentum from the shift of traditional delivery models to GDM,? he said.

Pricing for Q1 remained stable and was unlikely to rise for the rest of the year, Infosys said.

The company?s operating margins were affected by visa and compensation costs, while the weakening rupee, which depreciated 5.5% during the quarter, offset the impact to some extent. ?We believe that the currency market will remain volatile in the short term,? Infosys chief financial officer V Balakrishnan said.

The depreciating rupee prompted Infosys to revise its guidance under Indian GAAP, projecting revenues to be between Rs 21, 278 crore and Rs 21,622 crore for the fiscal 2009.

Earnings per share for the year, taking a tax reversal of Rs 31 crore for fiscal 2009 and Rs 121 crore in fiscal 2008, was likely to be between Rs 23.52 and Rs 23.95, up 22.1% to 24.4% y-o-y. Under the US GAAP, it maintained its earlier projections for the year.

For Q2 fiscal 2009, the company said it expected revenues to be in the range of Rs 5,229 crore to Rs 5,272 crore, growing 27.4% to 28.4% annually.

Bad news takes toll on indices

The market was relying on better-than-expected Infosys Q1 numbers to stage a comeback on Friday, but the sluggish growth of the IIP played spoilsport. Added to that was the price of crude crossing $147 a barrel and data on weekly inflation, which moved up to 11.89%. Both the benchmark indices lost heavily. The Sensex lost 456.49 points, down 3.28%, to close at 13,469.85, while Nifty ended the day with a loss of 113.20 points, down 2.72%, at 4,049.