IT stocks rally as Democrats seek Donald Trump’s impeachment
By Selene 0
Mumbai: Shares of technology stocks gained on Thursday as expectations of US President Donald Trump impeachment gathered steam.
According to PTI, a Democratic lawmaker has called for impeachment of Trump for his alleged involvement in obstruction of justice, after news reports revealed that he had asked then-FBI director James Comey to stop investigations against former national security advisor Michael Flynn. However, the report also said “that impeachment does not mean the president will be found guilty”.
Analysts said that reports of Trump impeachment are cheering up Indian investors as concerns of H1B visa may subside for a while now. “Investors are buying IT stocks on hopes that H1B visa which was expected to impact Indian technology companies will be put on hold at least for now if Trump impeachment goes through. Another positive factor that is adding to the sentiment is buybacks by these companies which is instilling confidence in investors,” said Jimeet Modi, chief executive officer, SAMCO Securities.
BSE IT index rose 2.5% intraday on a day when rally in the benchmark indices has taken a breather. Both the Sensex and Nifty are reeling under pressure on Thursday. However, index heavyweight Tata Consultancy Services Ltd rose as much as 4.5% to hit two-month high to Rs2,560. Rally in the stock has also driven its market capitalization to Rs5 trillion. Other IT majors Wipro Ltd rose 3.5% and Infosys gained 1.5%.
The IT stocks were under selling pressure due to Trump’s protectionist measures. Last month, Trump signed an executive order aimed at overhauling the work visa programmes that Infosys and other firms use to bring overseas workers into the US.
Recently, Infosys said that it is planning to hire 10,000 Americans in the next two years, following criticism from the Trump administration that the company and other outsourcing firms are unfairly taking jobs away from US workers. India’s outsourcing firms have come under attack for allegedly displacing American workers with employees from overseas.
In a separate development, TCS will start its Rs1,6000 crore buyback from Thursday. The buyback programme will close on 31 May, the company said in a regulatory filing. The share buyback, if successful, will be India’s biggest, surpassing Reliance Industries Ltd’s 2012 share repurchase of Rs10,400 crore.
At 1:30pm, TCS shares were trading at Rs2,534 apiece, up 3.37%, Infosys was at Rs962.60, up 1.09%, and Wipro was at Rs522.15, up 3.18%, on the BSE while Sensex was trading at 30,560 points, down 0.32%.
PTI and Bloomberg contributed to the story
First Published: Thu, May 18 2017. 02 06 PM IST