IT Stocks Jump The Most In Market Cap

In spite of growing challenges, information technology majors recorded the biggest jump in average market cap between October 2018 and September 2019.

- Rukmini Rao

AUTOMATION, REGULATORY PRESSURE and fears of a downturn resulted in heightened volatility in the IT/ITeS space. But unlike other industry segments such as FMCG or automobile, market leaders in this sector managed to do well, with leading stocks witnessing a 16.6 per cent jump in average market cap, while the aggregate market cap of BT 500 companies fell 1.5 per cent. The numbers are not as strong as expected from the once red-hot industry but analysts call it a temporary blip. In its ‘Outlook for the Global IT Market’, Gartner predicts 3.7 per cent growth in 2020, primarily due to enterprise software spending. “The slowdown in IT spending in 2019 is not expected to stretch as far into 2020 despite concerns over recession and companies cutting back on discretionary IT spending,” says John David Lovelock, Research Vice President at Gartner.

Closer home, things could be improving fast as IT behemoths are pursuing talent localisation in markets outside India to counter regulatory headwinds and shifting their focus from legacy services to digital-only areas in tune with global requirements. These initiatives mean there is not much fear of obsolescence and Indian IT stocks remain expensive.