Reliance Money negative on IT Sector

Reliance Money has maintained its negative view on IT sector. In the last one year it’s been quite a roller-coaster ride for the world economy , with US economy getting the maximum impact and its ripple effect is strongly felt in the Indian IT sector.

Reliance Money’s report on IT sector:

In the last one year it’s been quite a roller-coaster ride for the world economy , with US economy getting the maximum impact and its ripple effect is strongly felt in the Indian IT sector. Moreover, negative newsflow is dominating the headlines world over, with series of write offs, mounting losses, bankruptcy etc. making it more difficult for the Indian IT sector (60% revenues exposure to US, around 40% from BFSI).

Now it is quite evident that US economy is going through a severe recession and there is no sign of recovery in the medium term , in the given scenario US president Obama is proactively taking more protectionist measures to create more jobs in US, by putting restrictions on outsourcing and H1B visa curb, which we believe is going to hurt the Indian IT sector in the longer run. Nevertheless, we believe protectionist measures taken up by US is more of a medium term measure to stimulate the US economy, which we believe will be phased out in the coming years. However, with business visibility getting bleaker for Indian IT sector, we continue to remain negative on the sector.

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