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Weak opening on negative global cues
Tue, 28 Apr 09:30 am

Indian stock markets opened the session on a weak note with stocks from banking and IT sectors leading the pack of losers. The Sensex today was trading higher by 23 points at the time of writing. Stocks from the S&P BSE Midcap and S&P BSE Smallcap spaces are under pressure today with their respective indices opening lower by 0.6% each. Stocks markets across Asia, except Japan and India have opened lower.

With companies looking for new geographies for expansion, Africa seems to be the destination of choice. As per an aticle in Time of India, companies dependant on consumption ranging from Arvind in the textile space and Alembic pharma and Cadila Pharma amongst the drug manufacturers have set their eyes on the African continent. Companies like Arvind are also setting up manufacturing capacities in Ethopia. The growing middle class consumption patten is drawing corporates to the African nations. To add to that the governments in Ethopia and Rwanda are also offering tax incentives and competitive labour and energy costs. It remains to be seen whether such expansions bode well for the profitability of the companies in the longer term.

Meanwhile IT major Wipro has set its eyes on better margins via automation induced operating efficiency. The company expects its investments in automation, artificial intelligence (AI) and digital technology to improve efficiency. This will enable the company to bring about a reduction of 30% in its headcount in the next three years. Wipro is moving its automation focus from service desk to application services, which would lead to a reduction of 30% of its headcount. However, this would not mean more employees will get fired. In fact the attrition would be balanced with redeployment to new, high growth revenue streams.

As per yesterday's The 5 Minute Wrapup, earnings growth in the latest quarter was subdued for all IT majors, with dollar revenues coming in flat to marginally lower. While clients from sectors such as insurance, energy and telecom have been cutting down expenses - impacting players across the board - sentiments from other major sectors such as the BFSI space seem to have been mixed and subjective. But a trend that is common is of clients across regions (barring Asia Pacific) cutting down on their IT needs.

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Jan 24, 2018 01:39 PM