US recession, Indian IT & more... - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

US recession, Indian IT & more...

Feb 6, 2008

  • Fears of recession in the US were aggravated yesterday as cautionary statements from one of the Federal Reserve officials followed a report showing a big slowdown in the services sector. Following this, the US benchmark indices, Dow and Nasdaq, faced widespread selling pressure, consequently declining by 3% apiece. The Asian markets of today have taken cues from the US, and are down anywhere between 2% and 5%. The biggest losers currently are benchmark indices in Hong Kong (down 6%) and Japan (4%). The services sector performance follows cautionary remarks from some of the leading global experts. A case in point is the fear evoked by Jim Rogers, the commodities guru and the co-founder (alongwith George Soros) of the Quantum Fund. He had said a couple of days ago that "hard times, sliding dollar, inflation, etc." are here to stay, and that "...it's going to be much worse."

    The Fed's recent actions of printing huge amounts of money and lowering interest rates to soothe nerves of the financial system have failed to have much impact on the economy that is moving downhill. We believe that while India might be relatively insulated from a US economic recession considering that the dependence on exports in not so large, heightened risks will definitely have an impact on foreign money flows into Indian stocks in the short to medium term. As a matter of fact, the FIIs have sold stocks worth US$ 3 bn (on a net basis) in India during the current calendar year (as compared to US$ 17 bn of equities that they had bought in 2007).


  • In what could be termed as a sign of softening in the Indian technology sector, TCS, which is India's largest software services exporter, has asked around 500 of its employees to resign for their poor performance. This move is following the company's recent decision to reduce salary levels by 1.5% for the January to March 2008 quarter following an underperformance by the company on its EVA metric (economic value added). While this may seem a first of its kind move in the Indian tech sector, TCS had effected a similar attrition for its underperforming employees last year as well.


  • In a strict action against money laundering practices, the RBI has put on hold the award of banking license to the Swiss multinational bank, UBS. As reported by a leading business daily, the RBI's action follows UBS' reluctance to cooperate with Indian authorities to unravel a multinational trail of money transfers, which spans across Switzerland, New York, the British Virgin Islands and Pune. The MNC bank's deal to buy the Indian mutual fund business of Standard Chartered Bank (for US$ 118 m) has also been put on hold. UBS was, in fact, readying itself to open its first banking branch in the country shortly. The RBI's decision has come at a time when MNC banks have been vying to expand into the Indian banking space to be part of the huge opportunity that the sector promises. Currently, UBS is present in India through UBS Securities India Pvt. Ltd, a broking and investment-banking arm. It also runs a private wealth management business and an offshore unit in Hyderabad.

Equitymaster requests your view! Post a comment on "US recession, Indian IT & more...". Click here!

  

More Views on News

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

ONGC to NMDC: Here are 5 Stocks Value Investors Should Closely Track (Views On News)

Nov 26, 2021

Before investing in value stocks, research the company and gain insight into why the market is discounting it.

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

Omicron: How to Position Your Portfolio (Profit Hunter)

Dec 2, 2021

Taking decisions based on speculative news is injurious to your portfolio.

AI-Driven SaaS Provider RateGain Travel IPO: Key Points to Know (Views On News)

Dec 1, 2021

This travel tech start-up is one of the largest aggregators of data points in the world for the hospitality and travel industry.

More Views on News

Most Popular

What is EBITDA & EPS?

Here's a breakdown of what EBITDA margin means and why it is important as a valuation metric for investors.

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Dec 2, 2021 12:20 PM

MARKET STATS