IT shares hit 21-mth low on US woes
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Shares in India's leading software services (IT) companies including Infosys slumped to their lowest level in 21 months on Friday as investors retreated from the exporters on heightened fears of a recession in the United States, the top market for the sector.
Sector leader Tata Consultancy Services (TCS) fell up to 6 percent, Infosys dropped as much as 7.8 percent and No. 3 Wipro shed as much as 5.4 percent in the Mumbai market that was down 2.4 percent.
India's three largest IT companies dragged the country's IT index down as much as 3.8 percent to its lowest level since November 2009.
HCL Technologies Ltd , the No. 4 software services firm, dropped as much as 7.8 percent to 365.70 rupees on Friday after falling more than 6 percent in the previous session.
India's $76 billion software services sector, a major driver of the country's economic boom, gets more than half of its revenue from the United States, leaving it particularly vulnerable to the current uncertainty in the global economic outlook.
At 1 p.m. (0730 GMT) Tata Consultancy was trading down 4.1 percent at 923.10 rupees, No. 2 software services provider Infosys was down 6.1 percent at 2,209.80 rupees and Wipro was at 321.70 rupees, a fall of 2 percent.
Following the worsening scenario in the US and eurozone a further price damage will follow, said Sanjeev Hota, I.T analyst at Mumbai-based Sharekhan, adding the Indian firms could see more downgrades after the fiscal second-quarter results.
BNP Paribas on Thursday downgraded the sector to deteriorating from neutral on large cuts in earnings per share, citing macro weakness, likely recession and adverse macro data which could affect 60 to 70 percent of the sector's revenue.
Over the next few quarters, not only should Indian IT growth slow due to a higher base from continued headcount dependence, but weaker macro data should only worsen the situation, BNP said in the note.