Information technology (IT) stocks continued their downward journey on Thursday, with HCL Technologies, Tech Mahindra, TCS, Wipro witnessing selling pressure. The Nifty IT cracked below the 52-week low of 26,399.75 intra-day, marking the lowest level since May 2021, while the BSE IT index fell 1.44%.
An interesting fact is that the record plunge of the rupee is not helping curb the fall in IT stocks. A strong dollar against the rupee is considered to be positive for IT companies as a major chunk of their revenue comes from outside the country.
Nomura in a recent report indicated a potential slowdown for IT services demand as growth rates on spends are likely to decelerate, constrained by revenue and earnings volatility. “Although we still expect growth rates in the Indian IT sector in FY23F to be strong (double-digit revenue growth), we believe uncertainty on the same continuing in FY24F is extremely high,” Nomura said.