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Investors log out of IT stocks

business Updated: Aug 05, 2011 23:30 IST
Sachin Dave
Sachin Dave
Hindustan Times
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The big three of the Indian IT — TCS, Infosys and Wipro — fell over 2-4% on the Bombay Stock Exchange on Friday on fears that a possible double-dip recession in the US and the sovereign debt crisis in the eurozone, may hit their revenue growth.

Besides IT, technology, realty and power were the biggest losers, falling more than 3%.

“We will have to dance on the tunes of what happens in the US and Europe now,” said SP Tulsian, an independent analyst. “All companies that have a high dependence on the the US and Europe or where foreign institutional investors (FIIs) have a presence would be impacted most.”

According to analysts, the IT sector would be impacted the most as a huge chunk of their revenue come from the US and Europe. “IT and Technology firms are down due to international concerns while power and realty are down due to domestic ones,” said Alex Mathew, research head, Geojit Bnp Paribas Financial Services.

Even companies across sectors that have FII presence could see their share prices falling in the coming week. As expected, FIIs might pull out of the Indian market due to problems back home.

“For real estate the lack of volumes (sales) that is visible in the quarter results of companies due to the high interest rates in domestic market is the main culprit,” said Mathew.

“For power, the high coal prices are to be blamed,” said Tulsian.

However, the recent fall could also be a positive sign for domestic market according to industry trackers. “The RBI was planning to hike interest rates with a view to tame inflation but now with oil prices down, this does not seem likely,” said Tulsian.