US Immigration Ban: Share Prices Of TCS, Infosys, Wipro Suffer Heavy Losses In Stock Market
The IT industry has taken a massive hit as the employees are forced to work from home and clients halting the projects due to the COVID-19 pandemic!
Meanwhile, US President Trump has suspended all immigration into the US temporarily to protect the jobs of the American citizens.
Following this move by Trump, the shares of IT companies have declined due to pressure by 6% on the National Stock Exchange (NSE) in the early morning deals of April 21.
Read to find out more…
A Massive Blow to the IT Companies!
IT companies like Tata Consultancy Services (TCS), Infosys, Tech Mahindra, Wipro, HCL Technologies, Hexaware Technologies, NIIT Technologies and Mindtree were down 1% to 5% on the NSE in intraday trade.
However, the Nifty IT index has outperformed the market, down 2.1% compared to 2.7% decline in the benchmark Nifty 50 index.
Among individual stocks, Mindtree slipped 6% to Rs 739, while Hexaware Technologies slipped 4% to Rs 265 on the NSE in early morning deals.
Infosys, which announced its March 2020 quarter financial performance post market hours on April 20. IT major Infosys posted a 6.10% on-year rise in consolidated profit at Rs 4,321 crore for the quarter ended on March 31 compared with Rs 4,074 crore in the corresponding quarter last year. The stock hit anintr-trade low by 4% to Rs 628 in intra-day trade. However, the stock recovered partially as trade progressed to Rs 642 levels.
Infosys has also announced that it will stop hiring, freeze salary hikes, and suspend promotions, but there will be no layoffs amid coronavirus.
Among other companies’ individual stocks, TCS slipped by 3.77%, Wipro was down by 2.02%, Tech Mahindra shot down by 2%.
What is the Experts Take on This Downfall?
Analysts at Motilal Oswal, the brokerage firm in a post-result note wrote, “Despite COVID-19 impact on utilisation, in the January-March quarter (Q4FY20), Infosys was able to defend its gross margins (QoQ, 33.4%), which is comforting. Large deal signings in March 2020 ($1.7 billion v/s $1.8 billion in Dec’19) were impacted. However, it is important to note that the run-rate of new deal wins showed a meaningful increase (50% QoQ).”
The firm also expects supply-side aspects to ease even as Work from Home (WFH) may outlast lockdowns for a significant share of the workforce.
They also said, “In light of the heightened uncertainty in the near term, we were not taken aback by the cautious outlook of the company. Beyond near-term challenges, Infosys should be a key beneficiary of digital IT spent by enterprises.”