Sikka quits, long awaited

Infosys CEO Vishal Sikka resigns citing ‘continuous assault’ by NRN as the reason. With the kind on interference that the Ex-CEO was doing often, this news was expected…..

The wealth creator has now become the destroyer. 20000 crores of value lost today alone, since the stock corrects 7%. As it is, the Tech sector is loomed with slow growth, losing margins and now governance issues. INFY is one of the highly owned stocks by mutual funds, which means all the investors have lost wealth. And all this due to one person’s insecurity.

Old management in actual reality wants to control the company, while for the world, they show that, they have given management to expert hands. This episode along with the events that have been happening in the TATA group, shows the world that, Indian’s are still to learn a lot when it comes to having their wealth managed by professionals.

Though the Tech sector is a poor performer and the stock is showing very less growth, why did Mutual funds load so much exposure into this stock? HDFC owns 2%, ICICI Pru owns 1.50%. Is it due to the vicious thought that, it will come up one day and they should own it or just parked funds forcefully due to high capital availability, as the company has good liquidity and old track record of performance?

Such exposures are some of the reasons that Mutual Funds under-perform and lose confidence of investors.

There is open criticism in the media about the Infy board not able to manage a man with 3.44% stake, clear signs of more trouble in future. Stay away from technology stocks and more so from INFY. Protect the profit made from the stock in the early years, move out and invest in some good performing one’s and grow wealth. Do not become emotional and lose the gains made.