IT shares witness selling pressure

Shares of 10 IT companies fell by 0.5% to 5.36% at 10:45 IST on BSE after TCS warned there could be sequential loss of momentum as its clients may hold back discretionary spending in banking, financial services and insurance segment in the US.

Infosys (down 2.75%), HCL Technologies (down 2.71%), Tech Mahindra (down 2.36%), Wipro (down 1.77%), Oracle Financial Services Software (down 1.75%), Hexaware Technologies (down 1.23%), MindTree (down 0.98%), MphasiS (down 0.87%) and Persistent Systems (down 0.5%), edged lower.

TCS slumped 5.36% to Rs 2,315.85.

The S&P BSE IT index was down 3.03% at 10,108.16. It underperformed the S&P BSE Sensex, which was up 0.15% at 28,970.67.

The BSE IT index had underperformed the market over the past 30 days till 7 September 2016, sliding 5.09% compared with 3% rise in the Sensex. The index had also underperformed the market in past one quarter, falling 7.95% as against Sensex's 8.08% rise.

TCS announced after market hours yesterday, 7 September 2016, that it intends to update investors on business trends in Q2 September 2016. Based on data at the end of August 2016, the company has characterized customer outlook as one marked by abundant caution, with some holding back of discretionary spending - particularly in the banking, financial services and insurance (BFSI) vertical in the United States - resulting in a sequential loss of momentum.

The BFSI vertical reportedly contributed around 40% to TCS' revenue in Q1 June 2016.

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