IT Stocks Plunge As Pound-Sterling Slumps On Brexit

IT stocks nosedived on Friday after Britain voted to exit European Union leading to over 10 per cent slump in the British pound against the dollar. The IT sub-index on Bombay Stock Exchange plunged as much as 4 per cent.

The pound collapsed to a 31-year low and went into a freefall on Friday after Britain voted to leave the European Union.

Tech Mahindra fell nearly 7 per cent, HCL Tech declined as much as 6 per cent while TCS, Infosys and Wipro tumbled between 3-6 per cent each.

IT outsourcers are likely to witness huge translation loss (loss due to conversion of revenue in pound to dollar on profit and loss account) on their pound revenue impacting their dollar revenue growth as most of the frontline IT companies have exposure to the UK.

Analysts say TCS gets around 13 per cent of its revenue in pound while HCL Tech gets 14 per cent of its revenue from UK. Infosys and Wipro also get around 7 and 11 per cent of their revenue in pound respectively, said analysts.

TCS closed down 2.78 per cent, HCL Tech ended 3.47 per cent lower while Infosys and Wipro closed 1.31 per cent and 1.52 per cent lower respectively compared to 2.24 per cent cut in the Sensex.