CNX IT index down over 1% post TCS business update

TCS, Hexaware Technologies, Tech Mahindra NIIT Technologies and CMC were down between 3-4% on NSE.

Shares of information technology (IT) are under pressure and trading lower by up to 4% after Tata Consultancy Services (TCS) in an investor update has communicated for a weak revenue growth for the current (October-December) quarter.

TCS, Hexaware Technologies, Tech Mahindra NIIT Technologies and CMC are down between 3-4%, while Infosys, HCL Technologies, Wipro, MphasiS, Cyient, Rolta and Mindtree down 1-2% on the National Stock Exchange (NSE).

At 1433 hours, CNX IT index, the largest loser among sectoral indices, was down 1.5% at 10,770 points as compared to 0.02% rise in the benchmark CNX Nifty. IT index hit a low of 10,691 point during intra-day trade.

In its quarterly interaction with the analyst community, the management of TCS stated that owing to seasonal weakness on account of furlough, Q3FY2015 expects to be a soft quarter. Further, on an account of cross-currency headwinds, there will be a negative impact of 220bps on the reported USD revenues. However, there will be some gains from the depreciation of rupee against dollar during the quarter, and the net currency impact will be close to negative 20bps on reported revenues.

Analyst at Sharekhan is continued to remain positive on TCS and believe that the current weakness in the stock is a good opportunity to buy for an investment horizon of 12 months.

“We maintain our ‘Buy’ rating on the stock with a price target of Rs 3,100,” analyst said in a client note.

Among the individual stocks, NIIT Technologies dipped 4% to Rs 353, while Hexaware Technologies (Rs 204), Tech Mahindra (Rs 2,509), TCS (Rs 2,377) and CMC (Rs 1,832) down 3% each on NSE.