Why investors dump IT stocks ahead of TCS earnings?
IT stocks are under pressure on Tuesday ahead of TCS’ fourth quarterly earnings. Overall, on the day, TCS dipped over 2%, while rival Infosys almost neared its 52-week low levels and has slumped by nearly 3%. HCL Tech, Wipro, and Tech Mahindra among others are also in the red. The sector is in focus as TCS will kick start the Q4 earnings season tomorrow followed by other peers.
At the time of writing, the BSE IT index traded at 28,541.03 down by 255.17 points or 0.89%. TCS and Infosys plunged by 1.4% each.
However, TCS has dived by 2.2% in the trading session and Infosys tumbled by 2.7% with an intraday low of ₹1,389 apiece — which is a couple of rupees away from its 52-week low of ₹1,355.50 apiece.
After TCS’ Q4 earnings, Infosys will present its financial results on April 13.
Other major stocks were also bleeding– HCL Tech dipped by 1.2%, while Tech Mahindra and Wipro shed nearly a percent. L&T Technology Services and Coforge also slipped by 1.4% and 1.5%. LTI Mindtree was lower by over 0.5%. Persistent Systems also plummeted by over 1%.
The IT sector is expected to report a seasonally weak quarter in Q4FY23.
ICICI Direct expects IT companies to post QoQ constant currency revenue growth between -1% and 2.5% for Q4FY23.
In Tier 1, among IT firms, the brokerage expects TCS, Infosys and HCL Tech (IT services) to post a muted QoQ CC revenue growth of 1%, 0.5% & 1% QoQ, respectively, while Wipro is expected to report a QoQ revenue decline of 0.5%.
Among tier II IT companies, the brokerage expect LTIMindtree and Coforge to report a steady QoQ CC revenue growth of 2% & 2.5%, respectively, while Tech Mahindra’s revenue is expected to decline by 1%.
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Ganesh
http://ganesh@finplay.inFinance enthusiast, Mutual fund expert.