Nifty IT index down 2% on profit booking; TCS, Infosys, Wipro slip up to 3%

At 02:31 pm; Nifty IT index, the top loser among sectoral indices, was down 2.3 per cent, as compared to 0.43 per cent decline in the Nifty 50.

Shares of information technology (IT) companies were under pressure on Monday with the Nifty IT index falling over 2 per cent on the National Stock Exchange (NSE) on profit booking after Nasdaq fell 2 per cent on Friday on concerns about slower interest-rate cuts.

 

The US market fell sharply on Friday, and the yield on the 10-year note touched a six-month high. Recent economic data on inflation and retail sales and comments from senior Fed officials, including Chair Jerome Powell, weakened the case for a December rate cut by the Federal Reserve.

 

At 02:31 pm; the Nifty IT index, the top loser among sectoral indices, was down 2.3 per cent, as compared to 0.43 per cent decline in the Nifty 50. Tata Consultancy Services (TCS), Infosys, Mphasis, Wipro and LTIMindtree were down in the range of 2 per cent to 3 per cent.

 

 

Meanwhile, thus far in the month of November, till Thursday, November 14, Nifty IT index had outperformed the market and surged 5 per cent. In comparison, Nifty 50 was down 2.8 per cent during the same period.

 

On account of the furlough and holidays impact in October to December (Q3FY25), H1 has normally been strong compared to H2 in terms of growth for IT services companies. Given the continued growth momentum in Q2 along with green shoots in banking financial services (BFS), analysts at Prabhudas Lilladher expect the constructive recovery to continue with discretionary spends to extrapolate to other verticals beyond BFS.

 

Given the constructive recovery in H1FY25 with some green shoots in discretionary spends, enterprises are accelerating the critical transformation programs while emphasizing the cost parameters. Again, GenAI component has become an integral part of large deals. In this scenario, enterprises are gradually transitioning to front-end or growth-led initiatives vs disproportionate focus on cost-savings earlier, the brokerage firm said in IT sector update.

 

The brokerage firm remains positive on the companies having built full-stack front-end capabilities and delivered quality execution at scale. However, analysts expect margin pressure to continue in the near term across names, as levers are fully optimized, and incremental growth would be volume driven.