Indian markets are not showing any weakness, while the global markets are falling sharply in recent trading sessions. The past few months have been a roller coaster ride for investors and traders in the equity markets. Many stocks have fallen sharply, and many have recovered rapidly. However, unlike most other sectors of Indian markets, Information Technology (IT) shows little signs of a recovery.
Here is a detailed breakdown of the fall of the Information Technology sector.
Major Reasons For The Fall Of IT Sector In India
• When Indian Rupee falls against the US dollar: Indian Rupee and IT stocks are inversely proportionate to each other, meaning whenever the Indian Rupee falls, the IT company benefits as they mostly the companies earn from clients outside of India in dollars.
• Possible recession conditions in US and European markets: The interest rates are ever-increasing in most countries, and the fear of recession is increasing bearish sentiments in the global markets. The bearish sentiments cause a fall in revenue, sales, and growth of the companies.
• Declining of Global Markets: Since most IT companies earn from their international clients, the global markets hugely affect IT stocks. The recent fall of global markets is possibly the cause of the fall of the IT sector in India.
Why Are IT Stocks Falling When Rupee is Highest Against US Dollar?
As mentioned above, the decline in the Indian rupee caused more earnings for the IT stocks; however, the Indian rupee has declined sharply in the past few weeks, but IT stocks are also falling.
In this case, the other two reasons can possibly be the main factor in the decline of IT sectors. The global bearish sentiment and rise of Inflation in the US markets have affected the sales, revenue, and growth of IT stocks.