Information technology stocks, led by Tata Consultancy Services, were on a crash course on the Bombay Stock Exchange (BSE) today, even as the benchmark Sensitive Index went up 44 points.
The BSE IT Index fell more than 4 per cent. TCS, which announced disappointing results yesterday, plunged 10.63 per cent to Rs 887.05 a share – the steepest intra-day fall for the country’s largest software services company since its market debut in 2004.
Investors reacted to news that three of the company’s top five clients in the banking and financial services sector have deferred contracts. This deepened investors’ concerns about the slowdown in the US, the sector’s largest market.
The IT index closed at 3930.47 points, down 4.32 per cent or 177.67 points. Other large IT companies too ended the day in the red. Wipro was down 5.06 per cent to Rs 430.7 a share, Tech Mahindra 4.05 per cent to Rs 845.55, HCL Technologies 3.96 per cent to Rs 263.4, Satyam Computers 5.03 per cent to Rs 435.85 and Infosys Technologies 2.81 per cent to Rs 1598.9.
While investors are making a beeline to sell IT stocks, market experts said the sector will increasingly become a defensive play within portfolios. When Infosys Technologies declared its results on April 15, TCS rose more than the Bangalore-based IT company because of high market expectations.
Except for Satyam Computer Services, which posted 7.7 per cent net profit growth quarter-on-quarter, all the other tier-I IT firms (Infosys, HCL and Wipro) reported poor sequential growth numbers. The three firms have recorded low sequential growth in revenue as well.
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