Top three IT firms taste loss in a fortnight due to COVID-19 outbreak

Amidst pandemic Coronavirus outbreak, IT firms too have to suffer the loss. Top three IT services firms of the country lost a combined market capitalisation (m-cap) of around $31 billion in the past fortnight as coronavirus continued to roil the stock market.

Given the global spread of the virus, the fall in m-cap is not limited to India as all global IT services majors, including IBM, Accenture and DXC Technology have also witnessed fall in their market capitalisation.

From March 2 until Tuesday (March 17), m-cap of India’s largest IT services player Tata Consultancy Services (TCS) dropped by Rs 1.45 trillion (around $21 billion) as investors sold their positions in anticipation of demand slowdown. Similarly, the country's second-largest IT firm Infosys saw its m-cap drop by around Rs 70,000 crore (around $7 billion) in the past fortnight to touch Rs 2.36 trillion. In case of Wipro, m-cap fell by around Rs 26,000 crore (around $3.7 billion) to touch Rs 98,902 crore on Tuesday.

According to global research firm Gartner, global spending on IT is likely to grow at 3.7% in 2020. However, with major countries shutting down establishment to contain the virus, demand slowdown has now become a reality.

“With the global spread of coronavirus, the IT industry, which is projected to grow at 5 percent this year, can also see negative growth. Now, the industry is likely to grow in -5 to +5 range. This has definitely spooked investors,” said Pareekh Jain, an IT outsourcing advisor and founder of Pareekh Consulting.