Shares Slump Ahead Of US Presidential Election - Nov 04, 2008

At 13:45 IST, the BSE IT index was down 6.02% at 2,701.26, underperforming the barometer index the BSE Sensex, which was down 0.38% at 10,298.34.TCS (down 9.24% at Rs 498), Wipro (down 8.80% at Rs 251.90), Satyam Computer (down 8.36% at Rs 275), and Infosys Technologies (down 6.42% at Rs 1290).

US Democratic presidential candidate Obama has strong reservations on outsourcing and has made many statements during his election speeches that he would discourage this when he comes into power. The US Presidential Election will be held later in the day today.

Obama had promised of ending tax breaks for companies that ship US jobs overseas. Meanwhile, John McCain, the US Presidential Election candidate from the Republicans, has opposed federal curbs as well as private curbs on outsourcing to countries like India.

Some reports sugest that Obama may not really follow through with drastic changes to the outsourcing policy, since many companies still find it cheaper to hire from India.

India’s apex IT body, Nasscom, chairman Ganesh Natarajan had said in a recent media interview that Obama’s government, if at all it comes to power, will focus more on creating new job opportunities for its people rather than cutting down on outsourcing. He added that certain expertise was country-specific and would not be affected despite a change in government policy. He also said the Indian IT/IT enables Services companies should try and tap new and emerging markets in Japan, China , Asia Pacific, Africa and Latin America.

The BSE IT index had outperformed the market over the past one month till 3 November 2008, declining 7.59% as compared to the Sensex’s decline of 17.47%. It had also outperformed the market in the past one quarter, falling 24.36% as compared to the Sensex’s decline of 29.47%.