Indian IT service providers Infosys Ltd., HCL Technologies Ltd., Wipro Ltd., L&T Infotech, Mpahsis Ltd., and Coforge Ltd., among others, saw their shares fall 2.0-2.5% on Tuesday on the National Stock Exchange. As a result, Nifty IT slumped in a similar manner.
Concerns about weakening global macroeconomic conditions, as well as geopolitical turmoil, have weighed on IT stock. It is worth noting that Indian IT firms derive a large portion of their revenue from the United States and Europe. Delayed customer expense does not go well for the deal portfolio and thus the visibility of revenue growth for IT companies.
Rising commodity prices and the US Fed meeting keep investors on edge. As inflation fears return following the strong rally in global commodity prices, global equities are under pressure.
SGX Nifty at 17,410 indicates a drop of another 80 points at open for Nifty as US stocks fell more than 2% overnight. In early trade on Tuesday, Asian-Pacific stocks fell between 0.5% and 1.3%.
Retail is facing significant challenges, according to analysts at Motilal Oswal Financial Services Ltd. “Major retailers are reporting slow revenue growth, which will put a damper on IT spending.” To add fuel to the fire, profits at these major retailers are being eroded by inflation.”
Aside from that, the manufacturing sector faces a number of challenges, including semiconductor shortages, a lack of key raw materials (particularly from China), labour shortages, supply chain disruptions, and commodity price inflation. According to Motilal, raw materials are a major impediment to the sector. Oswal report
While long-term IT spending remains stable due to strong demand for these products, he cautioned that a late recovery in supply could have a short-term impact.
