Here’s Why: Nifty IT Corrects 18% YTD, 13% in Apr; Infosys Plunges 17%, TCS & More

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Here’s Why: Nifty IT Corrects 18% YTD, 13% in Apr; Infosys Plunges 17%, TCS & More
Credit: © Reuters.

By Malvika Gurung -- The highly-attractive IT stocks in global markets and the domestic have witnessed sharp sell-offs recently, majorly led by concerns compounding on the imminent aggressive interest rate hikes by the US Federal Reserves to tame the soaring inflation.

The revered Nifty IT index witnessed sharp corrections in April 2022, plunging almost 13% in the month and has tanked over 18% so far, in the year. Last year, the index awarded investors 59.6% returns, compared to Nifty’s 24.1%.

Fed’s upcoming aggressive monetary tightening has weighed on investors’ sentiments, along with high inflationary pressures and muted earnings reported by IT heavyweights, resulting in a double-digit correction in the Nifty IT index.

Rising US interest rates may impact US firms’ spending, including their IT budgets. Factors including global conditions, rising inflation, and the ongoing Russia-Ukraine war are supporting the US dollar.

A major reason for the slumping Nifty IT index is a sharp price correction witnessed in the tech-heavy Nasdaq Composite , which has plummeted 13% in April alone, its worst monthly performance since the global financial crisis in 2008.

On Friday, technology major Amazon (NASDAQ: AMZN ) plunged 14.05%, marking its steepest single-day drop since 2006, nearing its two-year lows, due to disappointing quarterly report and outlook. 

In the same session, the world’s most valuable company Apple (NASDAQ: AAPL ) slipped 3.66% post gloomy outlook, concealing its record quarterly profit and sales.

However, analysts expect the IT sector to witness double-digit growth in FY23, making it a valuable pick for a long-term view. 

AK Prabhakar from IDBI Capital Markets recommends Infosys (NS: INFY ), TCS (NS: TCS ), Sun Pharma (NS: SUN ), Gland Pharma and Zensar Tech among his top picks in the sector.

Here’s how much India’s top 5 IT stocks have tanked in the past month:

  • TCS (NS: TCS ): 4.3%,
  • Infosys: 16.9%,
  • Wipro (NS: WIPR ): 15.6%,
  • HCL Tech (NS: HCLT ): 7.6%, and
  • Tech Mahindra (NS: TEML ): 17.3%

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  • CE CE @CE CE
    I see , so whats up Charlie
    Like 3

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