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Concerns over weak revenue guidance by TCS spooked the IT counter on Thursday, with the top five IT stocks losing about Rs 40,000 crore in market value in Thursday''s trade, as investors judged the company''s outlook as a reflection of the state of the IT sector. Panic selling occurred after the largest domestic IT player said there could be sequential loss of momentum, as many clients were holding back on discretionary spending in the banking, financial services and insurance (BFSI) segment in the US. Shares of TCS slumped 6.53 per cent to hit a low of Rs 2,287 on BSE in morning trade. The stock recovered a bit and was trading about 5.2 per cent lower at Rs 2,320. At this price, the market capitalisation (m-cap) of the most valued stock on BSE stood at Rs 45,6854 crore compared with Rs 4,82,164 crore in the previous session. Infosys, the second largest domestic IT firm by revenue, saw its shares plunge about 6.7 per cent to Rs 1,027. Infosys investors had lost Rs 6,477 crore of wealth by then. The market-cap of the IT company stood at Rs 2,35,850 crore against Rs 2,42,328 crore in the previous session. Market cap of Wipro (Rs 2,661 crore), HCL Technologies (Rs 3,160.44 crore) and Tech Mahindra (Rs 1,268 crore) too saw significant value erosion. Overall, the market-cap of the top five IT firms was down by Rs 38,878 crore. This was the cumulative hit that the stocks took after recovering a bit from the lows hit in the morning. Experts believe IT biggies such as TCS, Cognizant (not listed in India) and Infosys are more dependent on the BFSI segment than their others like Tech Mahindra and HCL Technologies. Among the top picks we believe that HCL Tech would do better than Infosys. But Infosys still remains our top pick followed by TCS, Tech Mahindra and Wipro, said Urmil Shah of IDBI Capital. We were expecting some kind of negative reaction in the BFSI segment from the UK and euro zone post Brexit, but it is showing up in the US, said Sandip Agarwal, Edelweiss Financial Services. Probably banking profits are going down there. So this is obviously bad news for the sector. The worst-hit firms could be TCS and Cognizant, followed by Infosys, Agarwal said. Edelweiss Securities is advising clients to look at stocks with lower multiples compared with TCS. Foreign brokerage Credit Suisse said it prefers HCL Tech and Tech Mahindra more as they have relatively less exposure to the BFSI space. |
