The moment UK referendum tilted
towards the exit option, the UK currency sterling pound started getting pounded
due to uncertain course. UK voted in favor of exit from European Union and
pressing commission to complete the formalities at the earliest whereas
European Commission is no mood to give any relaxation in processes.
As per the economic and political
analyst, the disruption is going to have bad impact on UK economy and GDP is
bound to go down whereas financial segment is also fearing the move of
financial hub from London to another location based out of European Union
member countries.
The continuous fall of pounds are
worrisome point for Indian IT companies as they do huge business in Europe. UK
currency fell near to $1.23 a pound which is around 30% from pre exit level.
The continuous fall of UK
currency trapped Indian IT companies and I am sure they must have taken the
measure and must have done currency hedging but the fall is steeper than
expected. I am sure that once Indian IT companies will come out with quarterly
result, their margin, EBITA and profitability will come at the lower end of
expectation and in many case companies will miss the street expectation
In above scenario, we may see
huge selling pressure in IT stocks which can be buying opportunity for long
term investors
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