IT shares trade weak; TCS, Infosys down over 2%

At 10:51 am; the Nifty IT index was down 1.2% falling nearly 3% from its early morning high

Shares of information technology (IT) companies were trading weak, falling by up to 3% on the National Stock Exchange (NSE) after the sector majors Tata Consultancy Services (TCS) and Infosys declared their October-December quarter (Q3FY17) results.

At 10:51 am; TCS was down nearly 4% to Rs 2,261, while Infosys down 2% at Rs 978 as compared to 1.2% decline in the Nifty IT index and 0.10% fall in the benchmark Nifty 50. The IT index has fallen nearly 3% from its early morning high.

HCL Technologies, Wipro and Tata Exlsi were down less than 1% each. However, Tech Mahindra was up 1% at Rs 488 on the NSE.

India's biggest software services firm TCS reported 2.9% jump in profit to Rs 6,778 crore for the third quarter of the current fiscal on sequential basis. Revenue grew 1.5% at Rs 29,735 crore on quarter-on-quarter basis. The company beat Street estimates as it saw substantial jump in revenue from digital services.

"The resilience of our business model and strength of our operating strategy has been brought to the fore by our performance in Q3, traditionally a quarter of weak demand," TCS MD and Chief Executive N Chandrasekaran said.

“TCS reported revenue beat after several quarters and the outlook is also incrementally better. However, investor focus will be on management transition post the elevation of TCS CEO Mr. N Chandrasekaran (Chandra) to Tata Sons Chairman. Under Chandra's leadership TCS had delivered phenomenal results and set industry benchmarks on efficiency and growth,” analysts at Antique Stock Broking.

Incoming CEO and current CFO Mr. Rajesh Gopinathan has wide experience ranging from business to finance within TCS. However filling in Mr. Chandra's shoes will be a challenging task, the brokerage firm said in Q3 results review.

Infosys reported 1.4% quarter on quarter (QoQ) decline in its revenues at $ 2,551 million for the quarter ended December 31, 2016 in USD terms. It decline 0.3% in constant currency terms. On rupee terms, revenues decline 0.2% at Rs 17,273 crore, while net profit grew 2.8% at Rs 3,708 crore on QoQ basis. The company revised for the third time its annual guidance marginally to 8.4-8.8% from its earlier forecast of 8-9%.