Nifty IT, the sectoral gauge, was down more than a percent to become the worst-performing sector in the blue-chip pack. Tech stocks including Infosys, HCL Tech, Tech Mahindra and Wipro witnessed profit booking ahead of quarterly earnings due next week and amid an overall choppy trend in the market.
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Shares of major information technology companies, including Infosys, Tata Consultancy Services (TCS), and Coforge dropped on Thursday, having dipped 0.4 to 1.8 percent. Tech stocks witnessed profit booking ahead of quarterly earnings due next week and amid an overall choppy trend in the market.
Nifty IT, the sectoral gauge, was down more than a percent to become the worst-performing sector in the blue-chip pack. Eight of the 10 stocks in the tech pack were in the red. Technology shares in Asia as well as the Wall Street echoed a similar drop.
Investors across global markets turned cautious on minutes of the Federal Reserve’s last meeting that reinforced views the central bank may tighten aggressively to curb inflation.
Wipro shares slipped almost 2 percent during the day and were down 1.5 percent at Rs 584.70 on the NSE at the time of writing. In 2022 (year-to-date) the stock has erased more than 18 percent of investors’ wealth even as it has risen more than 2 percent in the past month.
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Shares of TCS were trading more than a percent lower at Rs 3,715.65. Earlier this week, the IT major signed a 'material multi-year contract' with a large US company, expanding its long-standing partnership to accelerate its cloud transformation journey.
Though TCS stock has wiped more than 2 percent of investors' wealth in 2022, in the one-month period it has given a return of more than 6 percent as against the benchmark Nifty which has surged almost 12 percent during the period.
Tech behemoth Infosys’ shares too witnessed selling shedding more than a percent in intraday trade. The stock, however, retreated marginally from initial losses and traded at Rs 1,826.40, down 0.13 percent from its previous close. In the past month, Infosys stock increased 5 percent of investors’ wealth and it has made them 28 percent richer since the past year.
Here’s how IT stocks are trading
The downtrend in IT stocks comes ahead of earnings that companies are to report next week.
Prashanth Tapse, vice president (Research), Mehta Equities told CNBCTV18.com that post Russia-Ukraine saga now investors focus has shifted to Q4 quarterly earnings.
"As of now IT stocks are underperforming the most as earning expectation are flat to moderate in the Q4, while margins can also come under pressure due to continued high attrition rates and higher manpower expenses in the space. Earning guidance will be highly focused; Further, any upgrade in FY23e guidance would provide strong visibility to the Indian IT services sector’s growth momentum. We are overall optimistic on the Indian IT space," said Tapse.
Last week, Ashwini Agarwal, Co-Founder and Portfolio Manager at Ashmore Investment, told CNBC-TV18 he thinks IT stocks could find favour owing to the weakness in the rupee and their safe haven nature.
“We expect a little more tailwind from a weaker rupee and there is a safe haven status that has been accorded to IT services. So at the margin, there is a swing in favour of IT compared to where we were 3 months ago,” he said on March 29.
The US index Nasdaq on which tech stocks are listed on Wall Street also logged a decline of over 2 percent for a second straight day as the minutes of the Fed meeting signalled that policymakers are looking to cut the central bank’s massive balance sheet as soon as next month.