Shares of nine IT companies fell by 1.31% to 4.93% at 9:52 IST on BSE as sector major TCS reportedly expects growth in Q4 March 2014 to be subdued.
TCS (down 4.93%), Tech Mahindra (down 2.81%), HCL Technologies (down 2.66%), Infosys (down 2.61%), Hexaware Technologies (down 2.60%), Oracle Financial Services Software(down 2.54%), CMC (down 2.39%), Wipro (down 2.09%) and MphasiS (down 1.31%), edged higher.
The S&P BSE IT index was down 3.32% at 8,572.48. It underperformed the Sensex, which was down 0.12% at 21,807.16.
The S&P BSE IT index had underperformed the market over the past one month till 18 March 2014, sliding 5.44% compared with the Sensex's 5.81% rise. The index had also underperformed the market in past one quarter, rising 1.31% as against Sensex's 4.66% rise.
TCS said in a meeting with analysts on Tuesday, 18 March 2014, that it expects a weak fourth quarter. TCS has reportedly based its comments on potential impact from seasonally slower demand in its biggest markets and continued demand volatility in Indian market. However, the company indicated that it expects its revenue growth next financial year to exceed that of the industry.
The analyst meeting was addressed by TCS finance chief Rajesh Gopinathan. TCS reportedly said growth in January-March 2014 would be lower than in the preceding quarter and margin would decline 40-50 basis points on cross currency movement and higher investments. The company reportedly added that long-term margin expectations were unchanged and so was commentary for fiscal 2015.
TCS, which generates about 17-18% of its overall revenue from emerging markets such as India, reportedly said it expected revenue from India to decline in the March quarter and remain under pressure in the near term following uncertainty during an election year that is delaying many projects.
On 12 March 2014, Infosys' CEO and Managing Director S.D. Shibulal's commented that the company's sales growth for the current fiscal year may be near the lower end of its forecast as some of its clients are tightening spending on technology. Shibulal said that the company's revenue growth in the fiscal year that begins in April may also be slow if business momentum remains weak. Infosys' clients in the retail and manufacturing sectors are facing spending pressure, he said. Many of the factors that have led to the recent slowdown will continue to impact client spending at least in the initial part of fiscal year 2015, Shibulal said.
It may be recalled that Infosys had at the time of the announcement of Q3 December 2013 results on 10 January 2014 raised its revenue growth guidance in both rupee and dollar terms for the year ending 31 March 2014 (FY 2014). At that time, the company forecast 11.5% to 12% growth in revenue in dollar terms for FY 2014. At that time, the company had forecast 24.4% to 24.9% in revenue in rupee terms for FY 2014 based on rupee dollar conversion rate of 61.81 for the rest of the financial year.
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