IT stocks buck market trend, fall upto 3%; what triggered the bear attack?
economictimes.indiatimes.comstocks declined in trade on Tuesday, which pulled the benchmark indices off their lifetime highs.
The Nifty IT index fell nearly 1% to 32343.90 points, and the Nifty 50 was trading 0.5% up at 20786.05. The 50-stock index scaled a record high of 20849.60 points.
Barring Tata Consultancy Services, most other IT majors fell in trade.
Coforge and L&T Technology Services declined 2-3%. Mphasis, Infosys, LTIMindtree, and HCLTech shed more than 1% each.
On the contrary, TCS shares were up 0.2% at Rs 3,520.05 on the National Stock Exchange.
HCLTech shares were hit by news that the company plans to sell its entire 49% stake in joint venture State Street HCL Services to partner State Street for $170 million. The amount will be in addition to the JV's net book value.
“The event will impact consolidated revenue by US$97 mn, or 0.8% of HCLT’s revenue, with an impact in FY25,” said Kotak Institutional Equities in its report.
According to the brokerage, these are not isolated events and appear to be part of the broader insourcing agenda of clients, impacting several vendors.
Kotak Equities further noted that TCS stands to lose from insourcing by Transamerica, whereas Tech Mahindra indicated insourcing pressure in top accounts.
Mphasis is also at a risk of getting impacted by insourcing by a few top accounts, and Cognizant Technology Solutions could be hit by insourcing in a few clients as well.
Therefore, overall revenue growth can be impacted for companies with high exposure to heavily insourcing clients.
hough this acts as a headwind to the sector, Kotak Equities prefers Infosys and HCLTech in the largecap segment.
