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IT shares fall after Cognizant reports poor earnings, revises revenue guidance

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Shares of information and technology companies fell on Friday, with the Nifty IT Index slipping nearly 2 percent, after global IT major Cognizant reported lower-than-expected earnings for the March quarter

IT shares fall after Cognizant reports poor earnings, revises revenue guidance
Shares of information and technology companies fell on Friday, with the Nifty IT Index slipping nearly 2 percent, after global IT major Cognizant reported lower-than-expected earnings for the March quarter. The US-based company has also halved its revenue guidance for the year 2019.
Among the Nifty IT stocks, HCL Technologies fell the most by about 3 percent intraday to Rs 1,131.45 per share. Tata Consultancy Services and Tech Mahindra also slipped more than 2 percent followed by NIIT Technologies, Tata Elxsi and Infosys.
The company's revised its revenue forecast in the range of 3.6 percent to-5.1 percent in constant currency terms, compared with 7 percent to 9 percent earlier. The outsourcing company slashed its full-year guidance after witnessing sluggish demand in its financial and healthcare businesses.
Cognizant CEO Brian Humphries during its earnings call said, "Revenue performance reflects both external factors, including in-sourcing among a few large financial services clients and the spending pullback in healthcare clients that are in the midst of merger integration, as well as Cognizant-specific execution issues."
The revenue for the quarter saw a growth of 5.06 percent to $4.1 billion compared to $3.9 billion during the corresponding period last year. Revenue from financial services declined 1.7 percent while other sector saw growth.
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