Shares of information technology (IT) companies came under selling pressure on Thursday, with Nifty IT and S&P BSE IT indices slipping over 3 per cent on profit booking.
HCL Technologies, Mindtree, and Persistent Systems were down more than 5 per cent each at the bourses. Tech Mahindra, Mphasis, and Coforge were down 4 per cent, while Infosys, Wipro, Tata Consultancy Services (TCS), and Larsen & Toubro Infotech were down between 2 per cent and 3 per cent.
At 02:26 pm, Nifty IT and S&P BSE IT indices, were down 3.3 per cent, as compared to a 2 per cent decline in the Nifty50 and the S&P BSE Sensex. The BSE IT index slipped 5 per cent from its record high level of 22,808 touched in the early morning today.
Thus far in the financial year 2020-21, the IT index has outperformed the market by surging 74 per cent, as compared to a 38 per cent rise in the Sensex till Wednesday.
Infosys slipped 8 per cent from its record high level of Rs 1,185 touched in early morning trade. At the time of writing of this report, the stock was trading 3 per cent lower at Rs 1,104 on the BSE. The IT major on Wednesday reported a healthy set of July-September quarter (Q2FY21) numbers on the revenue and profitability front. The company has also revised its FY21E revenues guidance upwards from 0-2 per cent year on year (YoY) to 2-3 per cent YoY in constant currency basis and operating margin guidance to 23-24 per cent from 21- 23 per cent.
“Infosys has consistently outperformed TCS over the past few quarters and also narrowed the margin gap between the two companies. In addition, healthy deal wins are expected to help the company make steady improvement in financials in coming quarters. Digital acceleration, large deal wins vendor consolidation and cost rationalisation remains key long term drivers. Further, Infosys has maintained healthy cash flow generation and has a consistent dividend payout policy,” ICICI Securities said in result update.
The brokerage firm expects Wipro to witness healthy revenue growth in the coming years, mainly led by healthy traction in deals, growth focus of new CEO, acquisition of new logos, and traction in digital revenues. Further, we believe that improving growth along with cost rationalisation will keep margins buoyant, it said.
The stock of Wipro dipped 3 per cent to Rs 339 in the intra-day today and was down 11 per cent from its all-time high level of Rs 382, touched on Tuesday, October 13, 2020.
Meanwhile, the announcement of a salary hike and promotions across-the-board by Infosys on Wednesday and earlier by TCS have come in as a surprise for analysts, according to a Business Standard report. CLICK HERE TO READ FULL REPORT
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