S&P hits market with rating downgrade of Indian IT majors

Credit rating agency Standard & Poor's Ratings Services today said it had revised the rating outlooks on three Indian information technology companies to negative from stable along with the sovereign rating downgrade of the country.

S&P revised the credit rating of Infosys Ltd, Tata Consultancy Services Ltd, and Wipro Ltd following the downgrading of India's sovereign credit rating.

''At the same time, we affirmed our 'BBB+' long-term corporate credit ratings on these entities,'' S&P said.

The outlook revisions follow a similar action on the sovereign credit rating on India (BBB-/Negative/A-3) (see "Outlook On India Revised To Negative On Slow Fiscal Progress, Deteriorating Economic Indicators; 'BBB-' Rating Affirmed," published April 25, 2012, on RatingsDirect on the Global Credit Portal).

''Our ratings on Indian information technology companies reflect our 'BBB+' transfer and convertibility (T&C) assessment of India. We could lower the ratings on these companies if we revise downward our T&C assessment. We could lower our T&C assessment if we downgrade the sovereign credit rating.

The action hit shares of the three IT majors, Tata Consultancy Services, Infosys and Wipro, whose shares fell pushing the BSE Sensex down 200 points to

Wipro led decliners, falling 7.15 per cent after warning about muted revenue growth, pushing down shares of rival Tata Consultancy Services down by 1.94 per cent.

The S&P action initially sent the Sensex and Nifty down more than 1 per cent. However, losses were later limited as bargain hunting helped lift shares such as Bharti Airtel.