Why Indian IT, tech stock not responding to Nasdaq rally — explained

According to stock market experts, Nasdaq has rallied because of the better results reported by index heavy weights and it is short-term rally as fear of inflation and recession is still looming in US economy. Market experts said that some money flow has taken place from the US dollar to equities as dollar index has gone down to 10-month lows. So, people are booking profit in dollar and switching money from currency to equities. They went on to add that investors have also moved towards the US equity markets as US Fed interest hike has almost peaked out.

Speaking on the reason for Nasdaq index rally, Sandeep Pandey, Director at Basav Capital said, “Nasdaq has rallied not because of change in market sentiment but due to stock specific approach by investors. Some Nasdaq heavy weights like Meta have reported strong quarterly results that has attracted bulls on Wall Street. Fear of economic slowdown and inflation is still looming there and hence Indian IT and IT enabled tech companies, who get majority of their business from the US and Europe as still in limbo. Their order book is still not in shape to which they are used to. In fact, some Indian IT companies have reportd bettter Q3 results but it is a big challenge for them to retain their employees and combat attrition as their margins are still not improving properly.”

Former Deputy Vice President of HDFC Bank went on to add that companies like Google, Meta, etc. have managed to report better numbers because they resorted to layoffs to keep their margins under check. These companies are yet to witness rise in their business volumes.

On fundamentals that is aiding Nasdaq rally, Saurabh Jain, Vice President — Research at SMC Global said, “Dollar index has hit 10-month low and hence those who had position in currency have started booking profit and switching money in the US equity markets because the US Fed’s interest rate hike has almost peaked out. Thus, investors are switching their money to equities and in such scenario, Nasdaq listed stocks with better quarterly numbers are attracting their attention and investment.”

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