August 31, 2011 by akhilendra

Future of IT shares in India

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Future of IT shares in India-USA is again going through tough times or rather it can be said that it is still struggling to come out of the financial crisis which started in 2008. US debt crisis are still haunting US economy and companies across the country are finding it hard to sail through it. Recent events related to it have worsened the situation. S&P and china has already downgraded the USA and it has further added the fuel to the raging debate of its ability to come out of it, at least in the near future.

Future of IT shares in India depends upon various companies across USA which are struggling and layoffs and expenses cut down has become a routine measures to control the situation. Amidst of all the happening in the USA, one another country which is already struggling with high rates of inflation and turbulent socio-economic situation is, India. Though situation in India is a lot different than USA, but right now Indian economy and especially Indian stock markets are influenced by the happenings in USA.

Futures of IT shares in India also contribute to the GDP of the country.Indian IT companies do contribute significantly to Indian economy and they are one of the favorites among the stock investors in India. They have consistently delivered good returns to the investors. But looking at the current scenario in USA and Europe, it is not very hard to predict that coming days for Indian IT companies are going to be considerable tougher than previous days.

When USA went through the financial crisis in 2008, major Indian IT companies shifted focus to Europe which helped them in diversifying their customer portfolio and mitigating the risk. But in the current scenario when Europe is also going through tough times, it is going to be a challenge for Indian IT companies to manage this crisis.

Indian stock markets are already falling and they are already at a lower level than what they were six months back. In this kind of situation, companies like TCS, Infosys, HCL and Wipro are finding it hard to acquire new business and retain existing customers. Lots of companies in USA are looking at cutting down their IT budgets for the coming year and it is going to have a negative effect on their growth.

For example, on 11 April 2011, Infosys closed at 3239.5 and at 30 August 2011, it closed at 2342.8. It is enough to show how IT shares have been falling in last few months. Though, IT shares are not the exception and shares across sectors have fallen in the last few months on Indian stock markets but their future in comparison of other sectors like Auto is more challenging in the near future.

Future of IT shares in India currently seems to be dark.

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