US Downgrade Could Hurt India's IT Sector

If the US government cuts public spending to control its deficit, then India's private sector growth, especially the IT sector, could slow down, says the Economic Times.


The newspaper says IT stocks have been amongst the worst hit since the US ratings downgrade. The BSE IT index on Monday fell 4.33% to 5,222 points. That was on top of the 5% decline on Friday. In the last week, the index has dropped over 11%.


"IT companies are export oriented and are hugely dependent on the US markets. Therefore negative news emerging from that region can lead to fall in stock prices," Srishti Anand, IT analyst at Angel Broking told the Times.


Hari Rajagopalachari, ED for consulting at PricewaterhouseCoopers, expects shorter-term impact for the IT sector if decision making on IT spends slows down. 


For T K Kurien, CEO of Wipro's IT business, it is too early to make an assessment. But he says the industry is far more prepared for any change in the macroeconomic environment now than it was in 2008.








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