Fears of a recession in the US grew after Federal Reserve's biggest rate hike in nearly three decades, followed by Swiss National Bank raising its policy interest rate for the first time in 15 years in a surprise move on Thursday.
All frontline IT stocks like Tata Consultancy Services (TCS), Infosys, HCL Technologies, Tech Mahindra and Wipro traded at their respective 52-week lows on the BSE.
At 09:45 AM, the S&P BSE IT index, the top loser among sectoral indices, was down 1.6 per cent, as compared to 0.34 per cent rise in the S&P BSE Sensex. The IT index hit a fresh 52-week low of 26,883.74 in intra-day trade. The index has fallen 31 per cent from its 52-week high level of 38,713 touched on January 17, 2022.
Thus far in the month of June, IT index has declined 11 per cent after a slew of foreign brokerage firms downgraded the sector and cut their target multiples. In comparison, the benchmark index was down 7 per cent during the same period.
IT companies saw some moderation in revenues in January-March quarter (Q4) in constant currency (CC) terms after witnessing strong growth in Q3. Tier I companies reported average constant currency growth of 19.9 per cent on YoY basis.
"While enterprise spending on technology is expected to go up, growth is expected to moderate year on year at an industry level, leaving space for outperformance through market share gains and strong deal wins," IT major TCS said in its financial year 2021-22 (FY22) annual report.
The company added: While the world and businesses are recovering from the impact of the Covid-19 pandemic of the last two years, new external and internal risk continue to challenge businesses in every possible way amplifying existing risks. Not only are the nature of risks evolving, but the speed of risk is increasing with faster time to impact. Geo-political situations like the Russia Ukraine war have further forced global businesses to revisit their operations, delivery, supply chains and contractual aspects.
According to Infosys, the spending on technology products and services by its clients and prospective clients fluctuates depending on many factors, including the economic, geo-political, monetary and fiscal policies and regulatory environment in the markets in which they operate, it noted in its FY22 annual report.
An economic slowdown or other factors may affect the economic health of the US, the UK, the European Union (EU), Australia or those industries where IT revenues are concentrated, the company said.
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