The National Stock Exchange saw opening deals on Tuesday with shares of Indian IT service companies Infosys Ltd., HCL Technologies Ltd., Wipro Ltd., L&T Infotech, Mpahsis Ltd., and Coforge Ltd. plunging 2.0–2.5 per cent each. Nifty IT experienced a similar fall as a result.
IT stock prices have been impacted by growing worries caused by deteriorating global macroeconomic conditions and geopolitical unrest. Keep in mind that the US and Europe account for a sizable portion of the revenue for Indian IT companies. Delayed client expenditure is bad for IT companies’ deal pipeline and, consequently, their ability to see revenue growth.
Retail, the second-largest vertical for Indian IT services companies, is experiencing significant headwinds, reported media. “The poor revenue growth reported by major retailers will impact IT spending. To add fuel to the fire, these huge merchants’ profits are suffering due to inflation, “In a report on August 22, it stated.
15 per cent of the total revenues of major caps Tata Consultancy Services and Infosys come from the retail sector. This sector accounts for 23.6 per cent and 10.3 per cent, respectively, of the overall revenue mix for the midcap companies Mindtree Ltd. and LTI.
The Motilal Oswal report noted that the manufacturing sector is also facing difficulties in addition to these issues. Key headwinds for the industry include:
Labour shortages.
Supply-chain disruptions.
Unavailability of key raw materials (from China).
Shortages of semiconductors.
Inflation in raw material prices.
Strong demand for these items keeps long-term IT spending steady, but it is said that a delayed supply recovery could have an effect in the short term.