MUMBAI: Indian shares dropped 2 percent on Thursday, weighed down by a broader market selloff, as investors dumped risky assets on worries over stubborn inflation and economic slowdown.
The NSE Nifty 50 index was down 1.95 percent at 15,924, as of 0353 GMT, with all its major sub-indexes in the negative territory, while the S&P BSE Sensex fell 2.11 percent to 53,067.39.
JPMorgan downgrades India’s IT sector as pandemic boom fades
Soaring inflation, supply chain issues and the hit from the Ukraine war will bring an end to the growth boom India’s IT services industry enjoyed during the pandemic, JPMorgan analysts said on Thursday as they downgraded the sector to “underweight.”
The $194-billion sector whose software services helped businesses adapt to pandemic-era practices of online shopping and remote working is facing a demand slowdown this year as employees return to offices and the Russia-Ukraine war weighs on spending from clients in Europe.
“We see peak revenue growth behind us and EBIT margins trending down from inflation, mean reversion,” JPM said.
“While the bottom-up outlook remains positive from most Services, Software and SaaS names YTD, and the tech spending cycle remains buoyant structurally, we feel there are more downside risks to current earnings assumptions.”
The brokerage expects the slowdown to worsen in 2023 partly due to a potential decline in orders from the key market of the US, where economic growth has started to weaken.
It lowered Tata Consultancy Services Ltd, India’s top IT exporter, to “underweight” rating from “neutral” but stayed “overweight” on rival Infosys.
India threatens to curb domestic coal supply if utilities delay imports
India’s power ministry on Wednesday said it would cut domestic fuel supply to state government-run utilities by 5 percent if they do not import coal for blending by June 15, as officials struggle to address rising power demand.
A heatwave pushed power use to a record high in April, leading to the worst electricity crisis in more than six years and forcing India to reverse a policy to slash coal imports.
“If blending with domestic coal is not started by June 15, then the domestic allocation of the concerned defaulter thermal power plants will be further reduced by 5 percent,” the power ministry said in a statement.
It said state government-run utilities, most of which are debt-laden, will have to import more coal to fire their power plants due to reduced local supply if they delay placing orders and supplies do not arrive by June 15.
The power ministry has asked all utilities to ensure delivery of 50 percent of the allocated quantity by June 30, another 40 percent by end-August and the remaining 10 percent by the end of October.
(With input from Reuters)