IT shares decline; Tech Mahindra dips 10% intra-day on earnings warning

At 1341 hours, CNX IT index was down 2.9% or 332 points at 11,031 compared to 1.6% fall in the CNX Nifty.

Shares of information technology (IT) companies were under pressure on the bourses as Tech Mahindra, the third IT company, warned about its April-June quarter (Q1FY16) results.

Tech Mahindra (down 10% at Rs 469), MindTree (5% at Rs 1,245), HCL Technologies (3.7% at Rs 922), Wipro (2.8% at Rs 543), Infosys (1.7% at Rs 988) and Tata Consultancy Services (1% at Rs 2,563) were down 1%-7% each on the National Stock Exchange (NSE).

At 1341 hours, the CNX IT index was down 2.9% or 332 points at 11,031 compared to a 1.6% decline in the CNX Nifty.

Tech Mahindra, the largest loser among the IT pack, plunged 10% to Rs 468, also its 52-week low on the NSE, after the company said in its business update today that the company's Q1 results have some headwinds and tailwinds which could see a risk of marginal decline in both revenue and EBITDA (earnings before interest, taxation, depreciation and amortization) margin on a sequential basis.

Tech Mahindra said that a seasonally weak mobility business will be a drag on Q1 revenues and EBITDA of the company. H1 B visa costs will be another drag on margins. On the other hand, favourable currency movements could help both revenue and margins, the company added.

Persistent Systems said on June 23 that its dollar revenues in the first quarter could be marginally lower compared to the previous quarter. The IT company attributed this to weakness in its current product engineering business, coupled with seasonal variability associated with its intellectual property business.

Shares of Persistent Systems were trading lower by 5% at Rs 580, extending their 15% decline in the past three trading sessions on the NSE.

On June 25, KPIT Technologies, the mid-tier IT company said that it expects a marginal decline in overall revenues of Q1FY16 sequentially and consequent decline in profits. The stock, which plunged 10% to Rs 90 on Thursday, has recovered nearly 6% in the past two trading sessions and is currently quoting at Rs 95 on the NSE.