IT stocks decline as Cognizant cuts 2014 outlook

Six IT stocks fell by 0.24% to 2.14% at 12:35 IST on BSE after US-based Cognizant cut its 2014 revenue outlook.

HCL Technologies (down 2.14%), TCS (down 1.65%), Infosys (down 1.58%), Oracle Financial Services Software (down 1.47%), MphasiS (down 0.87%) and Wipro (down 0.24%) edged lower. Tech Mahindra rose 0.27%.

The S&P BSE IT index was down 1.31% at 9,764.37 and was the top loser among the sectoral indices on BSE. It underperformed the Sensex, which was down 0.23% at 25,605.53.

The S&P BSE IT index had outperformed the market over the past one month till 6 August 2014, rising 6.26% compared with 1.14% fall in the Sensex. The index, however, underperformed the market in past one quarter, rising 13.51% as against Sensex's 14.03% rise.

Global information technology, consulting, and business process outsourcing services provider Cognizant Technology Solutions Corp. at the time of announcement of Q2 results on Wednesday, 6 August 2014, unexpectedly cut its 2014 revenue growth forecast to 14% from 16.5%, citing weakness at certain clients and long sales cycles for certain large deals. Cognizant follows a January-December financial year.

A majority of Cognizant's workforce is based in India. Cognizant competes with Indian software companies for outsourcing projects and the scaling back of guidance has renewed concerns of demand headwinds in the key markets of US and Europe, a report indicated.

The US-headquartered Cognizant on Wednesday, 6 August 2014 reported 24% rise in net profit to $371.9 million in second quarter ended 30 June 2014 from $300.4 million in the year earlier. Revenue rose 16.5% to $2.52 billion from $2.16 billion in the year-ago period.

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