Information technology stocks are likely to remain under pressure in the near-term amid headwinds emanating from the worsening economic situation in key global markets and financial market volatility, according to analysts.
While the country’s largest software exporter TCS reported a 5.2 per cent rise in June quarter net profit on Friday, kicking off the latest earnings cycle, IT shares have been sliding, with the BSE Information Technology index tumbling nearly 24 per cent so far this year.
Cross-currency headwinds and large scale talent churn resulting in higher wage hikes could also add to the challenges, especially in terms of the impact on operating margins, analysts opined.
Though it is early to draw conclusions, the ongoing political developments in the United Kingdom where Indian-origin Rishi Sunak has thrown his hat in the ring to be the prime minister, are also being closely watched. Sunak is the son-in-law of Infosys co-founder N R Narayana Murthy.