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Global headwinds slow down Indian IT industry’s growth

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Bengaluru, Dec 31 : Global headwinds such as macroeconomic factors, currency volatility and disruptive technologies impacted the resilient Indian IT industry in 2016, forcing Nasscom, its apex body, to lower the growth rate for fiscal 2016-17.

“The IT industry is going through a transient phase with global and domestic factors impacting its performance. While the effect of short-term factors may show for a couple of quarters, the worst is behind us,” Nasscom President R. Chandrashekhar told.

The single-digit growth of global software majors like TCS, Infosys, Wipro and HCL for the July-September second quarter made Nasscom revise its industry export revenue guidance to 8-10 per cent ($117-119 billion) in November from 10-12 per cent ($119-121 billion) it projected in February.

The National Association of Software and Services Companies (Nasscom) has, however, maintained the domestic revenue growth at 11-13 per cent to achieve Rs 1,560-1,590 billion ($22.9-23.4 billion) by March 31,2017.

“This year has been an interesting one for the industry owing to various global and domestic factors. Increased adoption of digital technology by consumers, e-commerce and start-ups has driven the industry’s growth in the domestic market,” Chandrashekhar asserted.

Though India accounts for 56 per cent of global sourcing with seven per cent market share of the world’s software and IT services, currency volatility and innovative technologies like artificial intelligence, automation, Internet of Things and machining have disrupted the industry’s traditional products and solutions to enterprises worldwide.

“To stay globally competitive, the industry needs to invest and enhance its digital capabilities. This entails a mix of reskilling, domain and platform capabilities coupled with acquisition-led competencies,” Chandrashekhar maintained.

Recovering from the fallout of the global financial meltdown in 2008-10, the Indian IT-BPM (Business Process Management) industry flourished to grow in double digits (12-14 per cent) on a wider base over the last couple of years, thanks to its adoption of cloud computing, big data, analytics and mobility.

As a result, the industry’s revenue grew 12-13 per cent in the 2015-16 fiscal to $143 billion, including $108 billion from exports, while domestic revenue increased by 10 per cent to Rs 1,41,000 crore.

For the first time in many quarters, IT bellwether Tata Consultancy Services (TCS) reported flat sequential growth for the second quarter, which made its Chief Executive N. Chandrasekaran admit that growing uncertainties in the environment was creating caution among customers and resulted in holdbacks in discretionary spending.

Similarly, Infosys lowered its annual revenue guidance to 8-9 per cent for this fiscal due to uncertain business outlook and currency volatility from 10-11.5 per cent on June 30 and 11.8-13.8 per cent it projected in April.

Unlike its peers TCS and Infosys, Wipro projected flat revenue from its IT services for October-December third quarter due to weak demand and uncertainty in technology spend.

The government’s push towards digitisation for a digital economy and enhancing the ease of doing business through administrative overhaul and tax reforms, however, augured well for the industry.

Looking forward, Chandrashekhar said 2017 would be the year of re-adoption for the industry, with technology disruptions reshaping enterprises and providers focusing on building technology-led platforms that can redefine services delivery.

“Trends like consumerisation of IT, SMAC (social, mobile, analytics and cloud), changing lines of business and new under-penetrated markets will alter the future of the industry.”

Industry hiring also took a beating, with the IT majors deferring recruitment of freshers from campuses, holding back appointments for laterals and postponing joining dates for new techies.

The industry employee base reached 3.7 million, with an addition of 200,000 employees in 2015-16.

“The industry is looking for talent from ‘qualification’ to ‘skill-based’ with greater focus on hiring ‘knowledge and expertise’-based talent,” Chandrashekhar noted.

(This is a part of a series of articles from IANS that look back at the year that was. Fakir Balaji can be contacted at [email protected])

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Key Indian equity indices open flat

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SENSEX NIFTY MARKET

Mumbai, June 25: The key Indian equity indices on Monday opened on a flat to negative note.

The 30-scrip Sensitive Index (Sensex), was trading 20.89 points or 0.06 per cent lower soon after opening.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) was also trading 9.20 points or 0.09 per cent lower at 10,812.65 points.

The Sensex of the BSE, which opened at 35,783.75 points, was trading at 35,668.71 points (at 9.16 a.m.), lower 20.89 points or 0.06 per cent from the previous day’s close at 35,689.60 points.

The Sensex touched a high of 35,806.97 points and a low of 35,658.19 points in the trade so far.

IANS

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Market Review: Amid volatility equity indices rise for 5th straight week

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SENSEX NIFTY MARKET

Mumbai, June 23: Despite volatility and a broadly bearish momentum, the key Indian equity indices rose for the fifth consecutive week, although with marginal gains.

Value buying by investors, primarily in banking, healthcare and auto stocks on Friday helped the indices end higher than the previous week’s levels.

The gains in the week ended Friday, were limited by global trade war concerns due to imposition of tariffs and counter-tariffs internationally.

Index-wise, the barometer 30-scrip Sensitive Index (Sensex) of the BSE rose by 67.46 points or 0.19 per cent to close at 35,689.60 points on a weekly basis.

The wider Nifty50 of the NSE closed the week’s trade at 10,821.85 points — up 4.15 points or 0.04 per cent — from its previous close.

According to analysts, market breadth was negative in all the five trading sessions of the week.

“Markets ended the week with marginal gains after trading in a rangebound manner for a major part of the week. It was nevertheless the fifth consecutive week of gains for the Nifty50,” said Deepak Jasani, Head of Retail Research at HDFC Securities.

Shibani Kurian, Senior Vice President and Head of Equity Research at Kotak Mutual Fund told IANS: “Volatility in the market continued during the week ended June 22, 2018 amidst rhetoric of intensifying trade wars between the US and China and the possibility of imposition of further tariffs against imports from China.”

According to Equity99’s Senior Research Analyst, Rahul Sharma, stock specific actions were the flavor of the week, “wherein HDFC twins (HDFC, HDFC Bank) shimmered, gaining more than 2 per cent”.

Further, during the week all eyes were on the outcome of the Organisation of Petroleum Exporting Countries’ (OPEC) meet, said Prateek Jain, Director of Hem Securities. OPEC, was expected to decide on raising its oil production to cool down oil prices and eventually on Friday it announced an agreement to raise oil output by nearly one million barrels per day.

On the currency front, the rupee closed at 67.84 against the US dollar appreciating by 18 paise from its previous week’s close of 68.02 per greenback.

In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors sold scrip worth Rs 2,088.81 crore, while the domestic institutional investors purchased stocks worth Rs 4,720.76 crore during the week.

Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors (FPIs) divested equities worth Rs 4,528.63 crore, or $665.71 million, in the week ended on June 22.

Sectorally, the top gainers were the Bank Nifty, pharma and energy indices, while the top losers were metal, public sector banks and IT indices, Jasani told IANS.

The top weekly Sensex gainers were ICICI Bank (up 6.57 per cent at Rs 300.85); HDFC (up 3.86 per cent at Rs 1,902.40); HDFC Bank (up 2.52 per cent at Rs 2,081.80); Tata Motors (up 1.63 per cent at Rs 308.15); and Yes Bank (up 1.41 per cent at Rs 335.20 per share).

The major losers were Coal India (down 5 per cent at Rs 265.10); Vedanta (down 4.23 per cent at Rs 228.65); ONGC (down 3.63 per cent at Rs 159.45); Wipro (down 3.34 per cent at Rs 257.95); and Infosys (down 2.66 per cent at Rs 1,246.45 per share).

IANS

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Oil prices rally after OPEC meeting

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OPEC

Vienna, June 23 (IANS) Oil prices surged as investors were closely watching the Organization of the Petroleum Exporting Countries (OPEC) meeting.

The West Texas Intermediate for August delivery on Friday rose $3.04 to settle at $68.58 dollars a barrel on the New York Mercantile Exchange, while Brent crude for August delivery was up $2.50 to close at $75.55 a barrel on the London ICE Futures Exchange, Xinhua news agency reported.

The OPEC on Friday announced an agreement to raise oil output which, in accord with non-OPEC producers, had been reduced last year in order to boost prices that had been in free fall mainly due to a supply glut.

Following a ministerial meeting here of the 14-nation cartel, the statement released, however, did not provide any details of the production increases to be allocated among members.

Current OPEC Chairman, the UAE Energy Minister Suhail Mohamed Al Mazrouei, told reporters after the meeting that the increase agreed upon is “a little bit less than 1 million barrels” over OPEC’s current output.

OPEC and non-OPEC producers, including Russia, had put in place 1.2 million barrels per day (bpd) cut from January 2017, which helped boost crude prices go over $80 a barrel last month.

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