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Shares of major Indian information technology (IT) companies including Tata Consultancy Services, Infosys and Tech Mahindra fell sharply in intraday trade on Wednesday.
The three joined Wipro and HCLTech as the top losers on the Bombay Stock Exchange (BSE).
Tech Mahindra shares were down 2.93 per cent at Rs 1,290.40 and Infosys shares were down 2.29 per cent at Rs 1,646 at around 12:35 pm. TCS fell 1.68% to Rs 4,079.25; Wipro fell 1.48% to Rs 504.55.
Most other IT stocks are also trading in negative territory.
What’s behind the weakness in IT stocks?
The IT index was the biggest loser among heavyweight indexes, falling sharply after the United States reported higher-than-expected inflation in January.
The U.S. Department of Labor reported that the consumer price index rose 0.3% this month and 3.1% in the 12 months. It is widely expected to be around 2.9%.
The inflation data triggered a sell-off on Wall Street, with major indexes falling more than 1%. This led to a sharp decline in the domestic market, especially affecting IT stocks.
It is worth noting that Indian IT companies are highly dependent on overseas business, especially the United States, which has a large order volume. While U.S. order intake has slowed for most Indian IT companies due to ongoing global uncertainty, rising inflation in the world’s largest economy is likely to exacerbate their woes.
Meanwhile, banking and financial stocks also faced sharp losses during the trading session as investors turned cautious following weak global cues.
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