Chinese arms of Indian firms brace for storm

The six per cent fall in the yuan since August could upset plans of Indian companies like Tata Motors and Hindalco's Novelis,   Nifty Trading Tips
The negative impact of the China slowdown can be seen in the stock prices of Tata Motors and Hindalco, which are this week down 12 per cent and 9.3 per cent, respectively.

For Indian information technology services companies like Infosys, which have campuses in China, the impact will not be material. "For most of them, China headcount is quite small. Besides, some of the business in China also comes from local clients, which means both the revenue as well as cost would be in Chinese currency," said Girish Paranjpe, former joint chief executive of Wipro's IT business. Stock Market Trading Tips

The IT firms will get some benefits, as software exports from their Chinese campuses will yield more in local currency, but will lose if the yuan depreciates more than the rupee.

V Balakrishnan, former chief financial officer of Infosys and chairman of Exfinity Venture Partners, said: "Indian IT firms may also lose as and when that (Chinese) currency will depreciate faster than the rupee, as the realisation will also come down. Besides, outsourcing spend from local corporates will also come down, under this pressure."  Commodity Trading Tips

Analysts said the Tata Motors stock corrected because its subsidiary Jaguar Land Rover (JLR) missed its sales target for 2015, with sales in China falling 24 per cent for the year.