TCS, Infosys, L&T’s IT stocks tanked, wiping $10Bn of tech wealth

All IT stocks of Indian tech giants like TCS, Infosys, L&T have recently tanked, wiping out investors’ wealth of around ₹80,000 crores ($10 billion) among a handful of IT stocks. This drop in the Nifty IT index stocks imitated the overall index, which was 3% down.

According to sources, TCS contributed almost half to the slide in Nifty IT but is more or less in proportion to its market capitalization compared to the other stocks in the index.

Inflation has been a pain in the nerve in the side of central banks of several countries globally. Shaktikanta Das, the Indian central bank governor, called it ‘globalized inflation’ while increasing interest rates for the second time.

The market crash also showcases a significant equity fall of the market worldwide amid US inflation hitting a 41-year high.

Wall Street has recently gotten through its worst week since January this year, and the US investors are in more pain.

This, in return, is terrible news for the Indian IT firms that rely on the US for a significant share of their revenues. Any sign of their spending habits deciphers into falling stock value.

The Indian IT sector made substantially amid the pandemic since the firms around the globe hurried to upgrade their IT infrastructure. But as inflation is becoming a pain point in most the economies globally, the firms are cutting back on spending.

This has directly impacted Indian IT giants like Infosys, Wipro, and TCS, among others.

As per recent research, the increasing margin headwinds in the coming time and revenue winds in the middle term from a possible macro slowdown imply that the sector’s earnings advancement cycle is behind.

The research states that soon there will be peak growth in revenue, and the margins of EBIT trending down from inflation reflects reversion.

Source Credit - https://www.businessinsider.in/tech/enterprise/news/tcs-infosys-lt-triplets-tank-on-us-troubles-wiping-10-billion-off-tech-wealth/articleshow/92172454.cms