As Tech Drives Markets Globally, Are Indian IT-Giants On The Decline?

As Tech Drives Markets Globally, Are Indian IT-Giants On The Decline?

BSE Sensex and NSE Nifty reach all-time-high figures in the last trading week of February. Sensex is trading at 73,837.51 points and the Nifty at 22,402.15 (13:06 IST) from their previous highs of 73,327 and 22,217 respectively.

Juviraj AnchilUpdated: Monday, March 04, 2024, 01:34 PM IST
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Dalal Street | Image: Wikipedia (Representative)

The US markets have been recording new heights over the past one week after a slow down, which saw Nasdaq and Dow Jones numbers slump. It bounced back with ferocity, making Wall Street almost unstoppable. The surge in the shares of the major indices, namely Dow Jones, S&P 500 and the tech-heavy Nasdaq has seen an exponential rise in their numbers.

This surge that started towards the end of February has continued into the new month, according latest figures, on March 1, Dow Jones Industrial Average ended at 39,087.38, rising 90.99 points or 0.23 per cent . The S&P 500 closed at 5,137.08, gaining 40.81 points or 0.80 per cent. And the tech-heavy Nasdaq jumped by 183.02 points or 1.14 per cent to reach 16,274.94.

'Techno show' at the markets

This recent surge is being mainly attributed to the surge in tech fortunes, fundamentally the wave of growth and upsurge that American-tech company, Nvidia has seen. In the last week of February alone the GPU manufacturing company notched up milestones one after the other. It first saw a mind-boggling USD 273 billion jump in its valuation, in just a single day. It followed it up by climbing the ladder to become the third largest company in the world, pipping Saudi Aramco, with a 2.05 trillion valuation.

The Japanese Nikkei also saw a major boost in its number, with the index scaling the 40,000 mark, again, driven by positive news from the tech sector, with Tokyo-based companies including Renesas Electronics, Advantest Corp. and Olympus making major gains on the stock market.

Meanwhile, the most populous country in the world also saw its two major indices, namely BSE Sensex and NSE Nifty reach all-time-high figures in the last trading week of February. Sensex is trading at 73,837.51 points and the Nifty at 22,402.15 (13:06 IST) from their previous highs of 73,327 and 22,217 respectively.

But the major distinction lies in the factors that are behind the increase in numbers, or more precisely, in the factors that are not contributing to the rise.

The Top 5 in decline?

Tech companies, that are aiding the uptick elsewhere in the major markets are not making substantial movements in the Indian context.

When we take top 5 tech-oriented Indian 'IT' companies into consideration, we see a pattern of decline in the shares of the listed tech-firms in the month of February.

Tata Consultancy Services or TCS, one of the oldest IT companies in the country, TCS traded in the last 10 days of the second month of the year with declining fortunes. TCS shares which were at Rs 4,103.05 per piece on February 19, ended the month with Rs 4,095.10 for its shares on February 29. Compare this to their recent peak of Rs 4,149.50 on February 13, there came to pass, a decline of 46.45 rupees.

Then, when we look at Infosys, another major tech-giant from India, the shares of the company stood at 1,699.75 on February 19, ended the month at Rs 1,673.90 per share on February 29. On February 6, shares of the company stood at Rs 1,729.45. Here there was a decline of Rs 55.55 per share.

Next, when we look at Wipro, the numbers were staked up at Rs 535.95 on February 19, compared to February Rs 518.60 on February 29. The shares stood at Rs 543 per piece on February 16. This resulted in a Rs 24.4 dip.

Noida-based HCL saw their shares drop to Rs 1,663.85 on February 29 from Rs 1,675.25 on February 19, and furthermore the drop is much more, when compared to the recent high of Rs 1,686.40 on February 22. This meant a decline of Rs 22.55 per share.

Finally, when we look at Pune-based Tech Mahindra, we see similar story, as share prices dropped to Rs 1,273.85 on February 29, compared to 1,310 on February 19, and a peak of 1,407.95 on January 24, there by exhibiting a slump of Rs 134.1 in price of per share.

What does this decline mean?

Now, these changes and subsequent decline in number may not appear significant, given the volume of it, but the pattern is distinct, and this, as mentioned before comes at a time, when there is a rise in Foreign Institutional investors and an uptick in the overall share numbers through indices, Sensex and Nifty. It also raises question regarding where the sector at large is going, with recent reports of slowdown. Another element that stands out, is the kind of services that are offered, unlike Nvidia, which specializes in chip-designing, dabbling in the semiconductor business with its advanced GPUs or graphics processing units, which apart from gaming, has also seen heights of its demand with the 'AI revolution'.

The 5 companies mentioned in this list do not specialize in the manufacturing of hardware, as their focus and business is largely service based. Now a fundamental change in business or integration of new verticals may be far-fetched, but whether these companies are missing out on the tech-advancements including the surge of Artificial Intelligence is major question that arises out of these recent developments on corridors of markets. As research and development (R&D) and investment in it, is often considered at the foundation of growth, attracting investments and use of those resources in the segment may allow companies to contribute and take part in the Dalal Street rise.

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