Information technology companies’ stocks will likely be hit hard on fears that Trump will curb outsourcing of IT work offshore.
Indian shares are likely to fall today, following the new US President Donald Trump’s inauguration speech, in which he strongly reiterated his protectionist agenda for US economy, in order to spur local production and job creation within the country.
“We will follow two simple rules – buy American and hire American,” Trump said immediately after taking oath of office on Friday. Observers said it was one of the most radical inauguration speeches by a US President.
Earlier Friday, before Trump’s swearing-in, Indian stocks ended lower on uncertainty revolving around Trump’s campaign rhetoric continuing in his governance and policy making. BSE Sensex ended down 1%, while NSE Nifty ended down 1.02%.
Information technology companies’ stocks will likely be hit hard on fears that Trump will curb outsourcing of IT work offshore. Indian information technology service companies, bulk of whose earnings come from offshore clients in the US and other western markets, use H1B visas to send employees to the US to work with the clients on their projects. However, of late, it has created resentment among the US residents, who face tougher competition for jobs. Indian companies face new challenge with the US President Donald Trump seeking to limit workers from other countries taking over jobs that locals could have had.
Earlier Friday, Tata Consultancy Services ended down 0.25%, Infosys was down 0.98%, Wipro was down 0.23%.
Almost a $100 billion of the $150-billion Indian IT industry comes from exports, with the US alone contributing to about 60-65% of the exports.
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Moreover, Trump’s quest for a strong dollar may trigger a run on Indian rupee, leading to investors exiting their holdings in India for safer bets in mature markets.
Most of the Asian stocks declined today as traders reacted for the first time to Donald Trump’s inauguration. Demand for safe haven assets rose. Nikkei fell over one percent, while Korea’s KOSPI was trading flat.
As per provisional figures, foreign institutional investors (FIIs)/ Foreign Portfolio Investors (FPIs) sold shares worth net Rs 26.34 crores on Friday, January 20, while domestic institutional investors sold shares worth net Rs 175.48 crores.
SMC Research said to watch FMCG and Energy sector to outperform today, while to watch Banks and Pharmaceutical companies for underperformance.
Analysts said domestic events such as the Union Budget, corporate earnings and state elections will now be watched more keenly by the investors for market triggers.