JP Morgan Reiterates Negative View On IT Sector

Leading global stock-broking firm JP Morgan has reiterated its negative view on information technology (IT) sector. It believes that IT companies will disappoint the market in Q1 of FY24 but it also sees the technology firms upsetting the Dalal Street in the second half of FY24.

The foreign brokerage firm has placed IT majors like Infosys, TCS and Mphasis on a negative catalyst watch, as per a report published in Moneycontrol portal.

The sectoral index, which has been on a downward trend since June 1, is down at 28,741.70 at 11:05 am, while Infosys and TCS are down 1.11% and 0.62%, Mphasis is marginally up 0.40% to remain in the green.

It is noteworthy that in the recent past, several analysts have highlighted that the sector is vulnerable to global headwinds. In the recent when the March quarter results were shared, the performance of the IT companies did not meet the street expectations and was disappointing.

The performance of Tier-1 technology firms in the March quarter was muted with the revenue growth ranging between -3.2 and 0.6 per cent, pointed out domestic brokerage firm Sharekhan. For instance, the Bengaluru-based Infosys' revenue declined by over 2 per cent QoQ. Moreover, it has now set single-digit growth guidance in the range of 4-7 per cent for FY24.

"The delayed spending in a few segments, concerns in BFSI, and fears over a global economic slowdown is impacting the overall performance of the sector. On the valuation front, over the past 1.5 years, the industry valuations have been corrected by more than a third," said Vinod T.P., a research analyst at Geojit Financial Services.