IT stocks plunge led by selloff in Tech Mahindra shares; Nifty IT index down over 1.4%

Nifty IT index plummets over 1% on disappointing earnings of Tech Mahindra. Selling pressure expected to continue in IT Index after lower-than-expected earnings from major IT companies.

Dhanya Nagasundaram
Published26 Oct 2023, 11:04 AM IST
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At 10:54 IST, Nifty IT down 1.34% on Thursday session.
At 10:54 IST, Nifty IT down 1.34% on Thursday session.

With Tech Mahindra's disappointing earnings, the Nifty IT index plummeted more than 1% on Thursday's trade amid an overall gloomy market environment. Among the top laggards of the Nifty IT index were shares of Persistent Systems Ltd (down 3.07%), Tech Mahindra Ltd (down 2.91%), and Coforge Ltd (down 1.95%). Analysts witnessed selling pressure to continue in the IT Index following the release of lower-than-expected earnings from major IT companies, along with lower guidance indicating less spending for the upcoming year. Tech Mahindra shares today was also one of the Nifty 50 index's biggest laggards.

At 10:54 IST, Nifty IT was down 1.34% on Thursday session. Nifty IT index touched intraday high of 30,299.55 level and low of 30,086.90 level. 

Shares of LTIMindtree Ltd, L&T Technology Services Ltd, Mphasis Ltd, Wipro Ltd, and Tata Consultancy Services Ltd was down over 1%-2%. 

“Poor results from most of the IT majors like TCS, Tech Mahindra, Sonata Software, Infosys has made to he market jittery about IT companies, and hence the IT Index is down. We continue to remain negative on the sector for the medium term while the long term view remains neutral,” analysts said. 

According to Amit Trivedi , CMT, Vice President - Research at YES Securities, after five months up move; IT index failed to sustain at higher levels, further under -performance from the IT index is possible. Comparatively, HCL Technology is looking stable and can be be bought for medium to long term perspective. 

“The Nifty IT Index has broken below its immediate support at 30,500. The overall trend appears negative, suggesting a strategy of selling on rallies. Currently, the support is at 30,000, and if breached, it may lead to a further downward movement towards 29,500 and 29,300. Any upward movement toward the 30,400 to 30,500 range should be considered a selling opportunity, as the bears seem to be taking control,” said Riyank Arora, Technical Analyst, Mehta Equities Ltd.

Also Read: Q2 Results: Tech Mahindra announces interim dividend of 12 per share, know record date

On Wednesday, Pune-based Tech Mahindra posted weak set of Q2 results, where the IT major failed to meet analysts expectations both on profit and revenue front. Following, disappointing Q2 results brokerages have slashed Tech Mahindra target price and earnings estimates and also kept the sentiment negative.

Also Read: Tech Mahindra falls 5% on weak Q2 earnings: Should you still buy?

Tech Mahindra's July-September (Q2) quarter earnings showed a sharp decline in profit after tax (PAT) as the revenue from the Communications, Media and Entertainment (CME) and BFSI segments declined significantly.

Tech Mahindra's Q2FY24 consolidated revenue from operations declined 2 per cent YoY to 12,863.9 crore in Q2FY24 against 13,129.5 crore in the year-ago period.

Consolidated profit after tax (PAT) for the quarter under review came at 505.3 crore, down 61.1 per cent YoY against 1,299.2 crore in Q2FY23. PAT, in dollar terms, came at $59 million, down 29.3 per cent QoQ and 62.5 per cent YoY.

Also Read: Tech Mahindra Q2 Results: Sharp fall in profit; dividend of 12; 5 key takeaways from Tech Mahindra's Q2 earnings

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions. 

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100

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First Published:26 Oct 2023, 11:04 AM IST
HomeMarketsStock MarketsIT stocks plunge led by selloff in Tech Mahindra shares; Nifty IT index down over 1.4%

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