Seven IT stocks dropped by 1.97% to 6.58% at 13:05 IST on BSE on concerns likely Greece exit from the Eurozone and its contagion effect could result into a fall in order inflow from Europe region for the Indian IT companies.
Meanwhile, the BSE Sensex was down 540.83 points, or 1.94%, to 27,271.01.
Among IT stocks, HCL Technologies (down 3.42%), TCS (down 1.42%), Infosys (down 1.74%), Oracle Financial Services Software (down 1.97%), MphasiS (down 2.25%) and Wipro (down 2.54%) edged lower.
Tech Mahindra slumped 6.58%. In its business update, the company announced during trading hours today, 29 June 2015, that the company's Q1 June 2015 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 of the company on 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, the company said. On the other hand, favourable currency movements could help both revenue and margins, the company said.
For the current financial year, the management's endeavour will be grow enterprise business in line or above industry. Improving EBITDA margin is one of the top priorities of the company for FY 2016, Tech Mahindra said. The company further said that the organic growth of the communications business of the company could remain subdued in FY 2016 due to delayed decision making. The deal pipeline of the communications business remains healthy, the company said.
The BSE IT index had underperformed the market over the past one month till 26 June 2015, dropping 2.17% compared with 1.02% rise in the Sensex. The index had also underperformed the market in past one quarter, declining 4.76% as against Sensex's 1.29% gain.
Meanwhile, investors brace for an increasingly likely Greek exit from the eurozone. Greece looked set to default on its debt repayment this week.
Greece reportedly closed its banks and imposed capital controls on Sunday, 28 June 2015, to check the growing strains on its crippled financial system, bringing the prospect of being forced out of the euro into plain sight. After bailout talks between the Left-wing government and foreign lenders broke down at the weekend, the European Central Bank froze vital funding support to Greece's banks, leaving Athens with little choice but to shut down the system to keep the banks from collapsing. Banks will be closed and the stock market shut all week, and there will be a daily 60 euro limit on cash withdrawals from cash machines, which will reopen tomorrow, 30 June 2015. Capital controls are likely to last for many months at least.
Greece needs a deal to unlock new financing ahead of a 1.54 billion euro ($1.75 billion) debt payment due to the International Monetary Fund (IMF) tomorrow, 30 June 2015. On the same day, Greece's international bailout expires. A default on its international creditors-the IMF and other eurozone governments-could force Greece into a messy exit from the euro.
Europe is the second biggest outsourcing market for the Indian IT firms after US.
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