The stock of Infosys has hit a six month low, while TCS despite reporting good numbers on Wednesday is down 1 per cent this morning. It seems tech stocks are out of favour at the moment and here is why?
Investors churning portfolio
Nobody is going to buy defensives stocks like those from IT, when it is highly likely that we are going to have a stable government that is going to push economic growth. A tactical shift is taking place from IT to economy related stocks including banks, infra and capital goods.
Sharp gains in rupee
The rupee has appreciated against the dollar from a historic low of 68.81 seen in Sept 2013 to the current levels of Rs 60.25. That's not good news as gaining rupee against the dollar tends to dent IT companies revenues in Indian rupees.
The NASDAQ last week fell 3 per cent in a single trading session, as investors heavily sold technology stocks, largely as they felt they were overvalued.
Not encouraging set of results
Even as we write the results from global heavyweights, Google and IBM announced in the US have been far from impressive. This may have some rub-off effect.
Not very encouraging revenue projections
Growth projections continued to remain subdued, particularly from heavyweight Infosys. Apart from HCL Tech, most others IT companies have shown far from stupendous growth.