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IT shares extend fall; TCS, Wipro, Infy hit 52-week lows on growth concerns

In the past two weeks, the Nifty IT index has tanked 10 per cent, as against a 5 per cent decline in the Nifty 50.

Buzzing stocks | Infosys Ltd | TCS

SI Reporter  |  Mumbai 

TCS, Wipro, Infosys, IT Companies

Shares of Information Technology (IT) companies continued to reel under selling pressure with frontline stocks hitting 52-week lows on the BSE in Monday’s intra-day trade amid growth concerns. Tata Consultancy Services (TCS), Infosys, and hit their respective 52-week lows on the National Stock Exchange (NSE) today.

At 10:01 am, the was down 0.98 per cent, as compared to 1.65 per cent decline in the Nifty 50. The IT index hit a 52-week low of 26,186.70, falling below its previous low of 26,189.40 touched on July 15, 2022. In the past two weeks, has tanked 10 per cent, as against a 5 per cent decline in the benchmark index.

Among the individual stocks, IT major Infosys registered a fresh 52-week low at Rs 1,355.50. hit a 52-week low at Rs 2,926, down 2 per cent in intra-day trades. The stock of IT major fell below its previous low of Rs 2,953 hit on July 15, 2022. Meanwhile, too hit 52-week low at Rs 384.60, down 2.5 per cent.

On Friday, US ended lower on the back of losses in technology stocks amid concerns about the outlook for the global economy.

Global growth is expected to moderate from 6.1 per cent in 2021 to 3.6 percent in 2022, driven by withdrawal of monetary accommodation in major economies, continued supply side shortages and economic damage from the war in Ukraine.

IT companies derives a material portion of its revenues from customers’ discretionary spending which is linked to their business outlook. Geo-political disruptions such as the war in Ukraine and resultant volatility in the global economy, or trade wars may adversely affect that outlook resulting in reduced spending which could restrict revenue growth opportunities. This could also result in steep inflation globally which could impact client spending as well as increase the companies’ cost of doing business.

Meanwhile, the revenue of the IT service providers may be impacted by up to 33 per cent due to a fall in the growth rate of three platforms, Amazon Web Services, Microsoft Azure and Google Cloud.

The Chinese cloud service providers have already reported a slowdown in growth. Major IT companies in India including Tata Consultancy Services (TCS), Wipro, Infosys and earn nearly 50 per cent of their revenue from digital solutions. Most of it is linked to the three platforms, the Economic Times reported in September. CLICK HERE FOR FULL REPORT

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First Published: Mon, September 26 2022. 11:08 IST