Shares of nine IT companies dropped 0.69% to 2.44% at 10:25 IST on BSE, with the stocks extending previous sessions' losses triggered by the UK's referendum outcome on 24 June 2016 showing it had voted to leave European Union.
Meanwhile, the S&P BSE Sensex was down 31.57 points or 0.12% at 26,366.14.
Tech Mahindra (down 0.91%), HCL Technologies (down 0.87%), TCS (down 2.44%), Oracle Financial Services Software (down 0.82%), Wipro (down 0.93%), Infosys (down 1.54%), MindTree (down 0.69%), MphasiS (down 1.25%) and Persistent Systems (down 0.92%) edged lower.
IT stocks extended losses amid concerns over the impact of Brexit on the Indian outsourcing companies. The UK is the second biggest IT outsourcing market after the United States. TCS reportedly derives 14% of its revenue in pound sterling. HCL Tech, Wipro and Tech Mahindra have 12-13% exposure in pound while Infosys has 6.6% exposure, report added. Pound sterling and euro took a heavy drubbing against the dollar post Britain's exit from EU.
The global brokerage house reportedly said that the depreciation of pound in the wake of Brexit would hurt the dollar revenue of Indian outsourcers when their pound earnings are translated into dollar. However, it added that US dollar's appreciation against other major currencies could partially offset the impact from weaker pound and euro. Overall, for the Indian IT sector, brokerage sees the earnings of Indian outsourcers to get impacted due to Brexit. The possible growth slowdown in the UK from Brexit effects is likely to impact the volumes of Indian outsourcers, it added.
The BSE IT index had dropped 2.13% on 24 June 2016 outperforming the Sensex's 2.24% drop on that day after global stocks tumbled after results of referendum on 24 June 2016 showed that Britain voted to exit European Union. The BSE IT index had underperformed the market over the past one month till 24 June 2016, rising 2.08% compared with 4.32% rise in the Sensex. The index had also underperformed the market in past one quarter, gaining 0.07% as against Sensex's 4.18% rise.
Powered by Capital Market - Live News