The Indian Information Technology stocks are trading in red again on Friday. The NIFTY IT index shed 749 points or 2.46 per cent in the realty hours of Friday and was at 27,023. Till 12.30 pm all the ten stocks that form part of the index were trading in the red. So far this year, the NIFTY IT index has been corrected by more than 28% YTD.
The companies are majorly affected by the negative global cues. For instance, on Wednesday global firm Goldman Sachs announced that it will start laying off employees as they see a mounting risk of recession in the US.
The technology stocks in the US saw a major sell-off just a day before that on Tuesday after inflation in August came in at 8.3 per cent, which was much faster than economists’ expectations of 8.1 per cent. This led to a round of fear in investors as they expect the Fed to raise interest rates more aggressively now.
This has a major impact on IT stocks as The US accounts for more than 65 per cent of revenues for most companies. A slowdown in the growth of the US economy will likely push clients to cut back on spending on IT services or delay the completion of ongoing projects.
Here’s what analysts have to say:
Goldman Sachs has downgraded its rating to ‘Sell’ for Infosys and curtailed its target price to Rs 1,244 from the previous Rs 1,722.
Goldman Sachs has also downgraded its rating of Tata consultancy services (TCS) to ‘Sell’ with a target price of Rs 2,611 from the previous Rs 3,678.
Further, the brokerage has slashed its targets for Tech Mahindra to sell at Rs 868 from its previous target of Rs 979.
However, CLSA has an ‘outperform’ call on the shares of Wipro with a revised target price of Rs 460 which represents an upside of 12 per cent from the current levels.
“Wipro exuded confidence in meeting it’s 3 per cent-5 per cent revenue growth guidance for 2QFY23 and double-digit revenue growth in FY23,” the brokerage said.
Written by Anoushka Roy
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