IT stocks tumble as US recession fears grow

Commentary

oi-Monika Nihalani

By Monika Nihalani

Published: Wednesday, August 24, 2011, 10:54 [IST]

The Indian Stock markets continue to fall tracking negative cues from the global peers. The 30 share benchmark index – Sensex witnessed a steep fall by 4% i.e. 702 points to 16,990.91 points in early afternoon trade. This was a steep fall over the span of two years.

With the growing fears among the investors about the US economy, the BSE IT index edged down by 4.28% at 5,439.11 points around 1:40 pm IST.

Indian IT stocks like Infosys, TCS, RIL, Wipro were among the major losers on the street.

India's big software firm Infosys was down 5% to hit a yearly low. At 1:50 pm, Infosys was trading at Rs 2,572.80.

TCS dipped as much as 4.55% to Rs 1,046.90.

Reliance fell nearly 3% and was trading at Rs 788.50.

Wipro was down by 2.23% to Rs 367.70.

Indian IT stocks tumbled due to burgeoning fears that US might fall into another recession. Investors dumped stocks after an overnight sell-off in US market.

The analysts said that investors are concerned over possible impact on Indian companies due to the continuing uncertainty in the US and the overnight fall in the Wall Street, which witnessed its worst fall in about two and half years on Thursday.

The Dow Jones industrial average fell more than 500 points Thursday, continuing a two-week drop in stock prices that has coincided with the federal government's last-minute dodge of a default on the national debt, a series of bad economic news and Europe's ongoing debt crisis.

The Fed has lately indicated it does not have plans to implement another round of monetary stimulus and the new focus on deficit reduction in Washington means Congress is not likely to try to pump money into the economy.

From May to June, consumer spending fell for the first time since September 2009.

The Bureau of Labor Statistics' next job report is scheduled to come out today. The agency's last unemployment result showed U.S employers added only 18,000 non-farm jobs to their payrolls and the national unemployment rate stood at 9.2 percent.

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