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Falling Rupee chokes the Indian Economy but presents Investment Opportunities

Kaushambi — Wed, 23 May 2012 05:55:10 +0000

Indian rupee has been free falling against the US Dollar for a while and yesterday it touched a new all time low of 55.39 rupees against the American dollar. Whilst there have been recent reports about how the Indian economy is pegged to grow at 7.5% in 2012, depreciation in the value of rupee is not a good sign.

One of the first hits that the economy takes when rupee tumbles is the rise in cost of imports. India imports roughly 70% of its crude oil requirements and a falling rupee means that the government will have to pay more.

Although oil and petroleum prices are controlled, the end consumer may very well bear the brunt of this increase in costs.

US Dollar Vs Indian Rupee [ 1 Year Chart]

In fact, Petroleum Minister S Jaipal Reddy talked about an immediate increase in fuel prices yesterday when the rupee dipped to new lows. He said "If rupee depreciates by one against the US dollar, our oil companies lose Rs 8,000 crore (annually)"

Some Negatives of Falling Rupee

We know that higher fuel prices can spiral into increase in inflation as industries across the board take a hit. This dreadful cycle of higher costs for crude oil resulting in losses for government units and higher fuel costs for industries and the end consumer is a challenging situation for the Indian economy.

The falling rupee also hits companies which rely heavily on foreign currency outflows to keep business operations running. Take for example the airline industry. For airlines that service international routes – International airport fees, lease of airplanes, salaries of expat pilots, jet fuel prices and many more relatively fixed costs are dollar driven. Such outflows in dollar terms become costlier when realized when local currency falls.

A further hit in demand for foreign travel is taken as the common man is likely to cancel outbound overseas trips during these times. Flights, hotel stays and every other service in foreign countries becomes more expensive as the purchasing power of rupee falls.

Even domestic airlines scramble to keep fuel and airline lease costs under tab by implementing measures like avoiding flying at high altitudes, sourcing cheaper on-flight meals, hire local pilots and taxing aircrafts with one engine only.

A falling rupee is also bad for the share market as the negative trend not only portrays a grim picture from a pure number crunching approach but also weighs in on investor sentiment. Foreign Institutional Investors (FII) may suddenly go on sell mode if fear of future losses outweighs likelihood of gain.

On the upside, times like these are excellent buying opportunities. The stock market is currently trading in the vicinity of 4 month lows and blue chip stocks are bottoming out.

There could be an enormous gain potential for such stocks in the long run. Investors who have made their millions from the share markets wait month after month for opportunities like these to buy-in at lower prices and sell when markets rebound.

Some Positives of Falling Rupee

In the midst of this chaos as the rupee tumbles, industries with dollar dominated revenues may in fact benefit from the depreciation of local currency. A prime example is the Indian IT sector which relies heavily on overseas revenue.

As a majority of revenue comes from overseas markets, companies like Wipro, Infosys, TCS, etc may witness higher realization of their dollar dominated revenue. However with low global demand and weaker growth forecasts, the full potential of the upside of rupee depreciation for the IT sector is yet to be seen.

Sectors like domestic travel could witness a boost as travellers will prefer to stay away from foreign destinations where they will get a subdued bang for their buck for the time being. Even Indian expats living and working abroad benefit from rupee depreciation. If they are paid in dollars, the realization potential of their salary in rupee spikes.

The rupee has lost about 22% since the beginning of 2012 and more than 11% since February this year.

Certain analyst camps blame the downfall on global concerns while other claim domestic woes are fuelling the drop. The government and mainly the RBI will need to intervene and clamp down on the sliding rupee to add stability to already volatile markets.

The poor performance of rupee is a drag on the Indian economy however there are definitely certain upsides to a falling currency which represent gain opportunities if investment decisions are taken at the right time.

Airtel Money Super Account launched in partnership with Axis Bank

Kaushambi — Wed, 16 May 2012 15:35:20 +0000

Bharti Airtel has partnered with Axis Bank to use combined forces of telecom and banking to offer financial inclusion (FI) to thousands of Indians who still don’t have any access to banking. Called Airtel Money Super Account powered by Axis Bank, the mobile platform will be powered by Airtel MCommerce Services Limited, a fully owned subsidiary of Airtel. Banking products and services will be brought forth by Axis Bank. Infosys has been roped in as the technology innovation partner to lend its expertise in mobile and e-commerce to successfully deliver this initiative.

Sanjay Kapoor, the CEO of Bharti Airtel for India & South Asia said "….nearly 43% of our country’s population does not have bank accounts and continues to rely on cash for majority of transactions as well as payments". This could be either because they have no access to banking or that they choose to rely on cash out of habit and mindset. In such a scenario, the aim of FI is to offer banking products and services to the under-banked and low income population of urban and rural areas of a country.

Airtel Money Super Account powered by Axis Bank allows customers of Airtel Money to open a No Frills Savings Account through which they will be able to carry out a variety of banking transactions. Airtel Money, launched in February 2012, is basically an account on a mobile phone through which cash can be deposited. This balance can later be used to pay for various products and services such as balance recharges, Digital TV bills, movie tickets, e-shopping, etc.

No Frills Account is essentially a simple Savings Account without the requirement of any fixed minimum balance. It caters to users who don’t need to use many cheques or make frequent withdrawals/deposits. No Frills Accounts were introduced by banks in India as per RBI directives in order to further aid the FI objective and policy of the nation.

The service will be first activated in India’s top remittance corridors like Delhi, Mumbai, Bihar and East Uttar Pradesh. For the time being, users will be allowed to send remittances from Delhi and Mumbai, and receive in Bihar and UP.

Airtel Money Super Accounts promise to be a boon in many ways. Customers can make cash deposits, receive remittances, transfer and withdraw money anytime. These transactions can be done from authorized Airtel Money-Axis Bank outlets.

The hassle of handling cash will be reduced by making banking transactions more secure, convenient and efficient. Customers will be also able to earn interest on their No Frills Savings Account.

There are many other services that Bharti Airtel and Axis Bank have in the pipeline for their customers. These include transferring funds to another bank account through NEFT and access other banking services like RDs, FDs and micro-insurance products.

To open a Super Account, customers can visit the nearest Airtel Money-Axis Bank outlet and fill out an application form. Know Your Customer (KYC) identification documents will be required.

There is little doubt that this alliance is a winning combination of Airtel’s vast reach and Axis Bank’s goodwill. Airtel has about 15 lakh outlets in India while Axis bank is a strong player in the banking sector. Add to this equation, the expertise of IT giant Infosys, the Super Account has everything working in its favour.

However the big question is whether this initiative will actually trickle down and percolate to the target audience.

It would only fair to assume that folks who prefer dealing in cash for tax reasons will continue preferring cash as these transactions are likely to be logged. So the cash loving Indian may not necessarily prefer transferring cash via a medium that will leave a trail.

However the obvious upside to the initiative is the fact that it will allow banking services to percolate down to the roots of the Indian population. As Airtel and Axis Bank add more services and expand the Super Accounts footprint, the currently unbanked population could very well be queuing up to sign up.

Indian economy to grow 7.5% in 2012 as compared to 6.9% in 2011 [ESCAP Report]

Kaushambi — Wed, 16 May 2012 05:31:15 +0000

As the markets slide to 4 month lows and poor Q4 results project a grim outlook for the Indian economy in 2012. However United Nations, Economic and Social Survey of Asia and the Pacific (ESCAP) report outlines defining factors that project growth and stability of Indian economy and surrounding regions in the Asia-Pacific.

For India, ESCAP puts forward a positive outlook for increased GDP growth in 2012 as compared to 2011.

Inflation remains one of the key things to watch out for in 2012. Until recently RBI has increased raise policy rates 13 times in 19 months. For the first time in many months, the policy rate was reduced by 50 basis points, hinting towards an easing monetary policy. As the government and RBI loosen their death grip over monetary and fiscal policies, ESCAP has a positive outlook for growth in 2012.

On the brighter side, despite tighter monetary policies that directly impacted personal consumption and demand, GDP grew by 6.9% in 2011. The ESCAP survey talks about reducing the impact of inflation on the poor by strengthening the government’s already existing policies to increase distribution of food items at subsidized prices.

Fiscal and budget deficit are challenges that India Inc will have to deal with rigorously. The government has already put targets in place to reduce budget deficits, however failed to achieve them for 2011 due to higher than expected expenditures.

The ESCAP survey acknowledges that the growth in trade deficit combined with depreciation of the rupee against the dollar have contributed to the slowdown in India in the last few years.

Energy shortage was also highlighted as possible deterrent to a fiscal surplus on which Kaushik Basu, Chief Economic Advisor to the Government of India, said "If the global prices are high for a product that is imported there is no way you can totally shelter the population. If you shelter it by holding that price completely constant, it appears that you are sheltering customer… but you are building on your fiscal deficit" The report talks about measures like reducing power theft, increasing exploration of oil and gas and developing renewable energy resources.

While all this does not happen overnight, India has taken massive strides in the field of solar energy. On the upside, more than 10 solar parks have been either completed or commissioned in various stages throughout India in the last 2 years.

The Indian government is currently promoting development and use of solar energy by moves such as reducing custom duties on solar PV panels, acknowledging investment in renewable energy projects and even giving subsidies of up to 70% for investments in solar PV plants in certain areas.

On an aggregate basis, inflation, soaring energy costs and poverty are dragging on the economy which grew 6.9% in 2011.

However key fundamentals of the Indian economy including a fast growing workforce, better policies, high savings / investment rates, and promotion of alternative / renewable energy will drive a projected growth of 7.5% for the Indian economy in 2012.

India’s Mobile Banking Adoption highest in World!

Arun Prabhudesai — Tue, 15 May 2012 12:34:34 +0000

Mobile Banking has really caught up in India – according to recently conducted survey by ACI Worldwide, 76% of Indian mobile respondents used their mobiles for banking in last 6 months. This percentage is highest across the world.

Comparatively, only 38% respondents from US, and 31% from UK used mobile banking in last 6 months. China, came in after India with 70% users using mobile banking followed by South Africa (61%). The global average for Mobile Banking adoption rate stands at 35%.

Source: Aite Group; ACI Worldwide study of 4,200 consumers in 14 countries, Q1 2012

Mobile Payment Usage

India comes in 2nd in terms of making payments on mobile. 64% of the survey respondents from India used their mobile phones to make payment atleast once in last 6 months, while Chinese led the pack with 66%. Surprisingly, only 30% of US respondents & 23% of UK respondents have made payments on mobile in last 6 months.

Importance of Mobile Payments & Money Movement

According to the survey, the countries with highest levels of mobile payment adoption also display highest importance on mobile payments and money movement. Roughly two-thirds of Indian consumers consider making payments and moving money using their mobile phone in the next three years to be “very important” to them —in contrast only one in 10 French and Canadian consumers think mobile payment is “Very Important”.

Replacing Traditional Payment Cards with Mobile Payments

Over 8 out of 10 Indians responded that they would prefer using a mobile phone to make a payments instead of traditional payment cards.

The lack of importance of mobile payments and money movement in a number of countries belies the interest that many consumers across the globe have in using their mobile phone to replace carrying payment cards. In Brazil, for example, although 39% of consumers consider mobile payment and money movement to be “very important,” 75% would use their mobile phone to replace cards.

Even in France, where just 9% of French consumers place a high importance on mobile payments and money movement, 44% express interest in replacing their payment cards.

One surprising fact in all the above findings is that western countries like US, UK, France, Germany etc. are low on mobile banking and payments. One of the reason I see is that they transact more from Desktop PC’s. Whereas in countries like India & China, majority of consumers only have mobiles on which they can carry out mobile banking / payments ( as they don’t own personal computers).

Income Taxes paid by Indians [Overview, Numbers & Graphs]

Arun Prabhudesai — Mon, 30 Apr 2012 12:02:59 +0000

Do you know how many Indians pay Taxes and how much?

You would be surprised with some of the numbers. According to the report released by Indian Finance Ministry, estimated number of taxpayers for financial year 2011-12 stands at just 3.24 Crore people. That means, less than 3 people in 100 pay taxes

Out of these 3.25 Crore people, 89% pay taxes in the tax slab of 0 – 5 Lakh rupees, while on the other end of spectrum, only 1.3% of all tax payers have income about 20 Lakh!

Number of Tax Payers in India & their Slabs

Slab	Number (in lakhs)	Percentage of taxpayers
0-5 lakh	288.44	89.00%
5-10 lakh	17.88	5.50%
10-20 lakh	13.78	4.30%
>20 lakh	4.06	1.30%

The graph clearly shows the inequality in the earnings of Indian people – Imagine, in a country of 120+ crore people, only 4 lakh people earn above 20 lakh rupees a month.

Now, if you consider that many cheat when it comes to taxes, even then the numbers are so skewed that it is mind-boggling.

This next graph will show you further how much wealth is concentrated amongst only a miniscule few!

Tax Collection by Tax Slabs

Slab	(Rs. in crore)	Percentage of tax collected
0-5 lakh	15,010	10.10%
5-10 lakh	21,976	14.80%
10-20 lakh	17,858	12.10%
>20 lakh	93,229	63.00%

The biggest surprise for me was – although, only 1.3% of all tax-payers earn more than 20 lakhs in India, they account for a whooping 63% of all the taxes collected by Indian Government. So 4.6 lakh Indians pay a total of 93,229 crore rupees of tax. That comes to an average of roughly 23 lakh per person!

Although, I was aware of this situation to a certain extent, after looking at the numbers in the report, I was taken aback by amount of inequality we have in India!

Would love to hear your comments on this!

[Via]

India rated 2nd most economically confident country in World

Kaushambi — Tue, 24 Apr 2012 06:26:00 +0000

Recent research figures released by Ipsos, a world leader in market research, for the month of March 2012 pegged India to be the 2^nd most economically confident country. More Indians believe that the current economic situation in India is good and are upbeat about the progress of the Indian economy in 6 months. This puts India ahead of USA, Australia, Canada, Great Britain and even China.

The survey called – Global @dvisor: Economic pulse of the World – interviewed 18,775 respondents via the company’s online system called the Ipsos Online Panel System which is used every month to collect information from respondents in 24 countries. Respondents assessed the current state of their country’s economy for a total global perspective.

The survey quizzed respondents regarding views about their country’s current macroeconomic state, how they perceive the state of their local economy and their outlook for their local economy in 6 months time.

A massive 79% of the Indian respondents said that India’s current macroeconomic state was somewhat good or very good. In simple words, nearly 4 out of 5 Indians think that the current economic situation in India is either very good, or somewhat good. In July 2011, only 62% of the Indian respondents felt the same, improving slightly to 65% in January 2012. Ipsos marked out India specifically as a country that was experiencing improvement in this regard. In fact, India tops amongst all other Asian countries in this survey.

% respondents who thought state of economy was “Very Good/ Somewhat Good”

India fared 2^nd, only after Saudi Arabia (89%) amongst all 24 countries including China (71%), Canada (64%), Australia (62%), USA (22%) and Great Britain (14%). Portugal (2%), Spain (4%), Hungary (4%) and Italy (6%) are the countries whose citizens are least confident about the current economic situation of their local economy.

That’s not the only reason for India Inc to rejoice. As compared to the previous months, India is the 2^nd most improved country whose respondents have confidence in the local economy. China was the most improved with 10% of the respondents having increased confidence in the local economy, as compared to 5% for India.

Most improved over previous month

The big question is, how do Indians feel about the local economy 6 months from now? As per the Ipsos survey, 57% of Indian respondents believe that the Indian economy will get much or somewhat stronger in the next 6 months. Going back to July 2011, only 43% felt the same while 50% of the respondents echoed similar opinion in January 2012. 71% of Brazilians and 29% of Saudi Arabians think that their local economies will fare much better in the next 6 months.

% respondents saying Economic State 6 months from now will be “Much Stronger/ Somewhat Stronger”

The fact that 4 out of 5 Indian respondents rate the current macroeconomic situation in India as very good or somewhat good, is a record highest. March proved to be a stellar month for Automakers in India as Tata Motors, Mahindra & Mahindra, Maruti Suzuki India and many more saw record jumps in sales. Recently, the RBI relaxed lending rates and some of the banks have already happily passed on these cuts to customers.

As RBI announced the 50 basis point cut in rate, analysts and experts came out with high hopes for GDP growth, business, housing and an overall better economic environment. The AGNI-V launch was a display of strength as India flexed its muscle to join the few other countries in the world which are capable of launching an Intercontinental Ballistic Missile (ICBM). Despite all the positivity, the movement in the markets have remained nearly status quo since the budget was announced more than 5 weeks back.

The market has been choppy and as this post come to you, BSE lost nearly 1.6% as it fell 277 points to 17,096 and the NSE lost about 1.71% as it fell 90 points to 5200 today. Year end results are coming out and major players like HDFC and TCS have posted stellar results while Infosys has disappointed. We are yet to see something that triggers a trend, whether upward or downward. If the Ipsos survey is anything to go by, at least the morale of Indian respondents seems high and their confidence in the Indian economy is rising.

Ipsos Global @dvisor: Economic pulse of the World [Full report]

India shining? Wait and watch.

Average IT / Software Salaries in India [Report]

Arun Prabhudesai — Mon, 23 Apr 2012 12:20:27 +0000

If you are an IT professional and in midst of a change of job or an appraisal, this report may be very beneficial for you. ZDNet Asia conducted an online survey between March 2011 and March 2012 to find salary packages of IT professionals from India.

The study findings are based on 508 Indian participants. Of these, 176 of them had less than 5 years of experience in IT industry and 254 had between 5 and 10 years, while 78 had more than 10 years’ worth of experience. Although this is definitely not a very large size, it is enough to draw broad conclusions about the salaries that IT professionals get in India.

So, if you are currently unsure of if your salary is more or less compared to your peers across IT Industry – This should definitely give you a good pointer at where you stand.

Average annual salary by IT skills & Experience (in rupees)

IT skills	Years of Experience
IT skills	Less than 5 years	5-10 years	More than 10 years
Application Development	431,616	881,376	1,364,788
Desktops/Software	318,395	640,154	949,618
System Administration	295,679	617,957	979,079
Servers/Networking	349,295	666,986	1,073,571
Web Development	447,126	-	-
Operating Systems	293,032	661,507	954,408
Database Management	386,741	685,909	1,214,667
Web Services	421,458	-	-
Infrastructure Management	334,958	781,422	1,209,714
IT Outsourcing	419,391	-	-
Consulting/Business Services	-	993,250	1,326,471
Web Development	-	798,637	1,271,278
Enterprise Applications	-	892,982	1,292,105

It is clear that if you are less experiences IT professional, Web development is currently the hottest thing. With everything moving on cloud, there is no doubt that web development is only going to grow. While if you are a senior IT professional or a consultant, you stand to earn higher than you peers who have other IT skills.

On the other hand system admin & Operating system jobs are lowest paid in the IT Industry on whole.

Average annual salary job function and industry (in INR)

Job Function
	IT, Web & Telecom	Government, Education & Health	Legal & Finance	Media, Marketing & Sales (non-IT)	Manufacturing, Services & Others (non-IT)	Overall


IT Management	1,000,012	574,091	986,500	794,667	874,444	903,216
Project Management	965,149	632,500	453,333	923,488	772,143	930,901
Systems Development	585,276	385,250	688,000	-	492,727	574,525
Communications	722,750	423,667	-	-	384,667	603,281
Support	462,599	234,000	482,500	300,000	438,143	440,505
Administration	489,936	408,700	591,400	320,000	452,100	484,854
Other IT Professionals	834,250	-	-	-	220,000	766,000
Overall	731,996	478,827	667,800	744,217	564,922	695,236

If you are an IT professional working in IT or Telecom Industry you stand to earn much more than your peers in other Industries. Government, Education & health are the worst paying Industries for an IT professional.

Read the entire survey by ZDNet Asia who also have benchmarks based on various IT Job functions, years of experience & IT skills

RBI cuts interest rates by 50 basis points, surprises markets!

Arun Prabhudesai — Tue, 17 Apr 2012 06:52:24 +0000

Finally after 2 years of continuous upward revisions RBI, in its annual monetary policy for 2012-13, slashed the policy interest rates by 50 basis points surprising analysts and markets. They were expecting a rate cut of 25 bps, but RBI surprised them all by being aggressive.

The repo rates at which Indian banks borrow money from Reserve Bank of India now stands at 8% as compared to 8.5% earlier. Similarly, the reverse repo rate at which RBI borrows money from Indian banks has come down from 7.5% to 7%. The CRR (Cash Reserve Ratio) has been left untouched.

Interest Rate Change over past 3 years

Date	Reverse Repo	Repo
17-Apr-12	7.00	8
25-Jan-11	7.50	8.50
16-Sep-11	7.25	8.25
26-Jul-11	7.00	8.00
16-Jun-11	6.50	7.50
3-May-11	6.25	7.25
17-Mar-11	5.75	6.75
25-Jan-11	5.5	6.5
2-Nov-10	5.25	6.25
2-Sep-10	4.75	6.00
27-Aug-10	4.25	5.75
2-Aug-10	4.	5.5
20-Apr-10	3.75	5.25
19-Mar-10	3.5	5.00
21-Apr-09	3.25	4.75

One of the main reasons that RBI decided to cut the interest rate is because the inflation has more or less come under check. Double digit Inflation was prevalent for about 2 years and RBI did not have an option but to keep the interest rates higher. The rate of inflation has eased to 6.9% in March of this year, which has been over 10% for most part of last year. The average Indian Inflation rate has been 7.99% in last 40 years.

Higher interest rate have slowed down economic as well as corporate growth in India. Couple of months back India’s GDP growth projection was revised downward from 7.60% to 7% for Financial year 2012-13. However, with RBI has cutting the policy rates, it is expected that India’s GDP will register higher than projected 7% growth.

It’s time to rejoice, as Banks may soon announce slashing of interest rates on home & car loans!

Do you think we will see more rate cuts in coming months?

Infosys bleeding: Low Q4 profits, competition with Cognizant, share price fall & now freezing salary increments!

Kaushambi — Mon, 16 Apr 2012 15:40:14 +0000

What happens when the stock price of the country’s largest IT giant tanks 13% in a single session?

The markets go into a frenzy, analysts go into an overdrive and investors fret. That’s exactly what happened when Infosys posted disappointing Q4 results on 13 April combined with the double whammy of a lower guidance for 2012-13. Here is a wrap up of the blood bath and the cruel week that followed.

Disappointing Q4 results for Infosys

Infosys shares witnessed a drop of around Rs. 350 on 13 April 2012 post results for Q4. This is the biggest drop in the share price of the IT giant in the last 3 years and wiped off Rs. 20,000 crore in market value. The shares tanked around 13% and the disappointing results also triggered drops in share prices for IT majors like TCS, Wipro and HCL. All the heavyweights tanked substantial losses.

On the same day Business Standard reported that Infosys lost its coveted ‘Most Influential Stock’ status not only to Ambani led RIL, but also fell behind ITC. In the trading sessions that followed, Infosys continued the losing streak and losses widened. At end of day on 16 April, the stock which was hovering around the Rs. 2,800+ mark closed at Rs. 2,360. The stock lost in excess of 15-16% since the blood bath began on the 13^th. Analysts and market gurus are pegging a subdued forecast for Infosys and not surprisingly so.

Reports of losing 2^nd place to Cognizant

If the blow from disappointing results was not enough, the lowered guidance for growth in FY13 puts Infosys trailing behind the industry growth estimates by Nasscom. The US economy is not in its best of shapes and if Infosys continues to chase the notion of ‘low volume, high margin’, it could very well lose its 2^nd spot to rival Cognizant.

Reduced hiring activity at Infosys for 2012-13

Late last week, Infosys announced that it would be making 35,000 gross additions to its workforce in 2012-13. While that is a staggering number by itself, it is more than a 22% drop from its hiring levels in 2011-12 when it hired in excess of 45,000 personnel.

Infosys freezing salary increments

"Today morning after our management council meet we announced that there will be no hikes, of course, employees will understand" said Nandita Gurjar, HR Head, Infosys.

This bone chilling announcement by the IT exporter came as it continues its battle with a weaker global economy and a lower growth guidance for 2012-13. Has this ever happened before? Yes. Infosys delivered a similar announcement back in 2008 but later brought back the smiles on the faces of its employees as it gave a near 10% raise in pay. While promotions don’t stop, increments do.

Whether this results is higher than average attrition or not, only time will tell.

Infosys going through tough times, accepts CFO V Balakrishnan

CFO and Member of Board V Balakrishnan spoke to ET Now today and accepted that the company is going through tough times. He voiced concerns for growth and volatility in the business environment which leads to degeneration in the company’s ability to predict and forecast. When quizzed about the weakened and lower guidance the CFO said "Finally we delivered 15.8%. So you are living in a very volatile world. Our guidance is a statement of fact. It can be positive and negative depending on how the world environment is going to move. We have given a guidance based on what we know at this point of time."

A weak US economy and fragile European counterparts are adding to the company’s woes as most of Infosys’ revenues from these two regions. Less hiring activity combined with the news of a freeze in increments, all seems to be going against the tide for the IT giant.

However it should be noted that there is really nothing wrong with the core fundamentals of the company. Infosys reported that it had 3 deals worth more than $100 million and a total of 5 large deals in 2011-12. Yes, the agencies have downgraded the stock and investors are giving it a massive thumbs down. But like Balakrishnan puts it "Companies can’t be run based on market reactions. You have to take decisions in the interest of the company’s long-term goals."