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Sunday, July 2, 2017

5 reasons why it will be another tough year for Indian IT sector:


stock tips
IT stocks have underperformed benchmark indices by a wide margin and the management commentary as well as global demand dynamics does not paint a very rosy picture for the sector.

The S&P BSE IT Index slipped over 14 percent so far in the year 2017 compared with 16 percent rally in the S&P BSE Sensex.

Companies which have investments in digital will benefit from the change in business mix led recovery even as the timing of it is uncertain.

“Our conversations with Indian IT companies, consultants, and the ecosystem indicate another tough year for the industry,” Kotak Institutional Equities (KIE) said in a note.

“Muted spending, the slow pace of deal closures, continuing captive shift, share and lack of much-anticipated kicker to financial services spending are the contributing factors,” it said.

KIE expects another weak year with drag factors, a continuation of previous year’s theme.

KIE is the view that all service companies have faced a slowdown in growth rates in the past two-quarters.

The reasons for the slowdown have varied across companies depending on exposure to verticals, geography or service offerings.

However, the inevitable conclusion is that growth is moderating.The domestic brokerage firm suspects this is on account of broader slowdown in spending though this is yet to show up in industry analysts’

Investment & trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance.
CapitalStars Investment Adviser: SEBI Registration Number: INA000001647

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