Six software stocks in the Nifty50 pack wiped out ₹45,000 crore of market capitalisation on Wednesday (December 13) even as the broader market fared reasonably well. While the Nifty Midcap 100 and Nifty Smallcap 100 gained nearly 1%, the benchmark Nifty closed marginally higher.
Had it not been the heavyweights like Reliance Industries Ltd. (RIL), HDFC Bank and ICICI Bank, the losses in benchmarks would have been much higher. While the largest company by market valuation — Reliance Industries — ended the session in the green, both HDFC Bank and ICICI Bank limited the overall losses with marginal cuts.
The market valuation of IT major Tata Consultancy Services (TCS) fell the most on Wednesday, which was followed by Infosys and HCL Technologies. While the market valuation of TCS declined by ₹28,742 crore, Infosys saw market cap erosion to the tune of ₹11,227 crore.
Company | Fall in Mcap (crore) |
TCS | -28742 |
Infosys | -11227 |
HCL Technologies | -1655 |
Wipro | -1332 |
Tech Mahindra | -981 |
LTIMindtree | -903 |
Total | -44840 |
With 6.04% weight, Infosys ranks fourth among the Nifty50 companies in weightage. The company along with TCS, HCL Technologies, Wipro, Tech Mahindra and LTIMindtree together command a weight of 14.04% in the index. This is almost equal to the weight enjoyed by India’s largest private lender. HDFC Bank boasts a weight of 14% on Wednesday.
Companies in the IT space have been facing multiple headwinds including slowing discretionary spends and weak demand environment. In fact, the management at the country's second largest software firm sounded more cautious about its near-term growth prospects.
“Management highlighted that the demand environment remains weak with clients holding back discretionary IT spends. While the deal pipeline continues to be healthy, this is being led mostly by cost-takeout deals,” wrote global brokerage firm Jefferies after an interaction with Infosys’ management. The management further added that in some cases, the same clients have decided to go slow on discretionary spending and have accelerated spend on cost-takeout initiatives.
While the benchmark Nifty50 closed 19.95 points or 0.10% higher, the Nifty IT index slid as much as 1.3% in Wednesday’s trade.
(Edited by : Sangam Singh)
First Published: Dec 13, 2023 9:16 PM IST
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