88 thousand crores dent: Panic due to huge fall in Indian IT stocks

Bussiness News. There are constant fluctuations in the stock market, and according to the data, the fear of recession is clearly visible on the faces of investors. Especially IT stocks are seeing a decline. The shares of some companies have fallen from 16% to 33% from their peak. Due to this, the total valuation of India's top 10 IT companies has fallen by Rs 88 thousand crores. Eight of these 10 companies are facing recession, including Infosys, HCL Tech and Tech Mahindra. The biggest decline has been seen in LTI Mindtree, which has fallen by 33%. On the other hand, Wipro has performed slightly better, but is still down by 16%.

On Thursday, the stock market fell for the fifth consecutive day. Nifty is down about 15% from its peak, and Sensex has also fallen by more than 13%. Although Sensex has increased by 630 points in the month of March, but the way it is falling, it seems that Sensex and Nifty may fall for the sixth consecutive month.

Global markets likely to be affected

The possibility of recession in America is increasing, which can affect the global market. The tariff imposed by the US President has worried investors. Apart from this, questions are also being raised about the stability of the US economy. According to the Chief Economist of JP Morgan, the possibility of recession in America is up to 40%, which can also have a negative impact on India's IT sector.

Weak revenue growth forecast

Global brokerage firm Morgan Stanley has reduced the revenue growth forecast for Indian IT companies by 1-2%. This means that the growth rate of IT companies may slow down considerably. Due to the slowdown in the US economy and weak GDP growth, moderate growth is expected for Indian IT companies in the coming times.

The threat of AI

The rapid development of AI (Artificial Intelligence) is bringing new challenges to the IT industry. The increasing use of Generative AI (GenAI) may increase competition for software exporters. This may harm existing companies.

The issue of valuation

Despite the recent correction, the P/E ratio of Nifty IT is higher than the P/E of Nifty. Despite this, the valuations of IT companies are still higher than the average of the last five years, especially during Covid-19.

Fading expectations of Fed rate cuts

The possibility of interest rate cuts in the US has diminished, which is increasing the problems of IT companies. Due to inflation, the Federal Reserve may delay cutting interest rates, which is a negative sign for IT companies.