As the Information Technology sector continues to adjust to the disruption caused by digital technologies, foreign portfolio investors (FPIs) are reducing their investments to the Indian IT companies. Wipro witnessed a higher drop in its share held by FPIs as compared to its peer companies.
Wipro, a company which had decided to overhaul its business operation over past few years, reported a greater fall in its foreign portfolio holdings. The holdings by the foreign players came down to 8.72 percent from 9.27 percent at the end of the last financial year.
The FPIs of Infosys has also continued to offload their investments even after an asset manager Franklin Templeton raised its stake in the company. The holding of the FPIs in the Bengaluru Bengaluru-headquarter giant has plummeted by 37 basis points to 34.82 percent.
One of the fastest growing IT major, Tata Consultancy Services (TCS) also reported a decrease in the foreign holdings but at the lower percentage with its number going down by 29 basis points to 16.59 percent.
Interestingly, one of the major features of the Indian markets in the current year has been the high volatility in terms of investment when it comes to foreign inflow and outflow. The stock and debt markets have also witnessed the up and downs in terms of FPIs investment. With Fed reserve hinting at two more cuts in this year, it is expected that the FPIs would prefer a safer place to invest its money.
"The FPIs have been reducing its holdings in the IT companies for a while now. Although, TCS is growing its valuations are too high to invest. Wipro is also struggling when it comes to making any substantive improvements. Last year Infosys was going through an internal tussle over corporate governance. So, the FPIs are waiting for the market to stabilize before they buy a substantial stake in Indian IT companies." The Economic Times quoted one of the Mumbai based analysts.
Wipro shares sank seven percent in the first quarter of the current financial year, while Infosys' shares shoot up by 15 percent. TCS' stock grew by 29 percent in the same period.