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It seems that the bottom was hit on 21 September, when the benchmark techMARK 100 index hit 1110.98. Now the index has rebounded to 1653.83, and has risen 20 per cent in the shorter period since late October.

Teather & Greenwood's software man Adam Lawson and Beeson Gregory's Head of Research Alan Matthews both explain the recovery primarily in terms of private clients coming back in to the market, though Matthews adds that institutions are now prepared to buy stocks that may still have some bad news to come out because the valuations are so low.

Indiscriminate buying

Matthews reckons that the technology sector is going to take longer to recover than the wider economy and as such favours 'the less volatile end of the technology spectrum' ? firms that have good fundamentals combined with 'valuation anomalies'. Amongst those favoured, ICM Computer has risen 9 per cent to 295p over the past month, Pace Micro Technology has moved up 44 per cent to 428p, Planit is up 17 per cent to 45p and SurfControl is ahead by 30 per cent to 557.5p.

In contrast, telecoms equipment companies like Telemetrix (up 53 per cent to 168.5p), Chloride (up 89 per cent to 87p) and Volex (up 78 per cent to 405p) 'have gone too far' says Matthews, and should be shunned. He also puts the likes of Autonomy (up 41 per cent to 423p) and ARM (29 per cent to 443p) in this bracket. Lawson looks to Xansa, Aveva and Rage Software for relative value, being unimpressed with Morse and ISoft.

Eyretel impresses again

Customer relationship management solutions firm Eyretel is not one of the more high profile tech plays but keeps on making steady progress. It followed up October's positive trading statement with its first profit of £100,000 before tax at the interim stage. Gross margins were up and sales were ahead by 28 per cent to £24.2 million. The shares gained 20 per cent to 91.5p.

Supply chain software firm Kewill Systems meanwhile saw its shares rise 27 per cent to 66.5p after a mixed set of interims, showing turnover down on last year and a loss of £4.9 million.

Drug developments

The biotech scene has been busy, with Provalis receiving glowing approval for its Glycosal drug from the US FDA, which boosted the shares 55 per cent to 19.75p.

Phytopharm has started trials of its anti-Alzheimer's drug P58, helping it to surge 41 per cent to 437.5p, while Profile Therapeutics signed an agreement with Pfizer to licence out its 'intelligent inhaler' technology, contributing to a 25 per cent share price rise to 68.5p.

CeNeS Pharmaceuticals, a firm currently in the throes of cost-cutting, has won a contract with a US research firm, but has also been forced to terminate an agreement with debt laden Bioglan Pharma, which has in turn admitted that it is up for sale. It shares are down 10p to 12p; CeNeS is up at 10.5p.

Antisoma is down at 45p, having made a loss of £2.3 million in the three months to 30 September, leaving only £602,000 in the bank. Unsurprisingly, it is seeking further funding.

Meanwhile Galen reported final results showing pre-exceptional pre-tax profits up 71 per cent to £40.5 million for the 12 months to the end of September. Its shares receded slightly to 722p.

Coming soon

After the tech surge of the last month, finding a techMARK stock on a single p/e is not easy. But broadband telecoms equipment maker Advanced Power Components, whose results for the year to the end of August are due soon, is such a company. Unsurprisingly, given the markets that it operates in, APC released a profit warning in August and has decided to write down stock and cut staff, resulting in costs totalling £2.5 million.

The market expects the company to report a pre-tax profit of about £1.2 million, converting into earnings of 5.4p, leaving APC (at 50p) trading at just over nine times earnings for the past year. While profits will be down in 2001-2, Eaglet Investment Trust felt confident enough to increase the size of its stake by eight times since the warning, for an 8 per cent holding. Investors might like to follow.