At about 9:35 am, Nifty IT index was quoting at 34,999, higher by 2%, snapping its 5-day losing streak on the bourses. Infosys led the pack with gains of about 4%, followed by Wipro, Tata Consultancy Services, Tech Mahindra, HCL Tech, and LTIMindtree, rising up to 2%. Infosys and TCS shares are in a bear market, down 20% and 25% year-to-date. Nifty IT is also the worst sectoral index this year.
Infosys Buyback Details
In an exchange filing on Monday, September 8, the IT major announced that the board of directors will consider a proposal for buyback of fully paid-up equity shares at its meeting to be held on Thursday, September 11. If approved, this will be the fifth share buyback to be conducted by Infosys.Infosys’ buyback comes at a time when the company’s stock has seen significant underperformance, falling nearly 25% over the past year and declining 24% on a year-to-date basis.
What should investors do?
Analysts say the buyback comes at a crucial time when technology stocks face headwinds, and the buyback may provide much-needed support to investor confidence. FIIs have been relentless sellers of Indian IT with selling of an outflow of Rs 19,901 crore July followed by another Rs 11,285 crore exodus in August.“India IT Services’ investors are grappling with multiple concerns. President Donald Trump can influence cross-border flows through executive powers. This can be done most notably by tightening H-1B/L-1 visa rules (impacting IT outsourcing), invoking IEEPA or sanctions to restrict payments to foreign service providers, and regulatory levers in telecom, data, and financial services via agencies. These measures act as de-facto barriers, enabling the White House to constrain services trade without needing fresh Congressional approval. Going forward, these executive levers remain the most likely pressure points to watch,” domestic brokerage JM Financial said in a recent note.Furthermore, heightened buzz around tariffs in IT services reignited this week after political activist Jack Posobiec tweeted that “all outsourcing should be tariffed,” arguing foreign countries must “pay for the privilege of providing services remotely to the US the same way as goods”. This post was later reposted by Peter Navarro, Senior Counsellor for Trade and Manufacturing to the US President. This, JM Financial suggests, reflects growing concern that the US’ stance on tariffs may expand from goods into services.
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