Page 24 - It Sector News Today

The Bengaluru-headquartered firm, once the bellwether of the Indian IT industry, topped the list of companies which saw the most downgrades over the past year.

“Demand supply is not against the IT companies and so margins will be protected. Demand continues to be softer and unless we see significant pickup in order wins in fiscal year FY 2025. But probably in the next couple of quarters, demand is expected to be weak, which will weigh on the valuations of most of the larger IT companies as we speak.”

IT companies are slowing down hiring to improve margins and honour last year’s offers amidst an uncertain demand environment.

After remaining net sellers from April to June, FIIs have poured in Rs 7,101 crore from July till September 15, at a time when management commentary and guidance from IT majors painted a stark picture for the sector, show NSDL data.

“FII money may get impacted in the short run. In the long run, I do not see any impact on the medium to long run and FDI, which is where India is doing very well from Make in India, from people like Apple coming to India and other companies getting ready to come in India. If anything, after the short term turbulence, our country comes out as one of the best winners across the globe.”

Indias dependence on global markets for liquidity has reduced, with retail India providing strong inflows. rising US yields will not have a severe impact on India, as the country is more resilient and has seen higher interest rates in the past. Indian markets may be sideways in the medium term, but quarterly results and earnings growth will drive market performance. JM Financial Services is researching and keeping an eye on opportunities in the finsumption, capex, and Make in India sectors.

“In terms of numbers, if we are able to stay in that 18,900-20,400 kind of a band till Diwali, we would have done very well for ourselves. But I do believe at some point of time, we could test 18,900 and possibly even 18,400-18,500. On an overall basis, one should be aggressively booking profits in midcaps and smallcaps."

Rahul Singh of Tata Mutual Fund, emphasizes the importance of asset allocation and balanced portfolios in managing risks in the current market scenario. While global factors such as rising yields and the strengthening dollar index are impacting valuations, Indias strong fundamentals and growth potential are expected to limit sharp corrections. Singh advises investors to focus on the right asset allocation and maintain a balanced portfolio.

“Emerging market flows could be under pressure and which is what we have been seeing for quite a few months. India was the last man standing, most emerging markets had been getting outflows from three-four months back, India held down till end August and it was only in September that we got a little bit of a shock in terms of outflows.”

Deal closure timelines for the top 20 global IT services firms have gone up by 15-20 percent in FY23-24 compared to 2020 and 2021, according to UnearthInsight.