TCS tanks 5% on outlook warning, other IT stocks trip too
TCS scrip Thursday plunged over 5 percent, knocking Rs 24,797 crore off its market valuation, as the company has warned that its financial sector clients in the US are holding back on discretionary spends, leading to a "sequential loss of momentum".
New Delhi: TCS scrip Thursday plunged over 5 percent, knocking Rs 24,797 crore off its market valuation, as the company has warned that its financial sector clients in the US are holding back on discretionary spends, leading to a "sequential loss of momentum".
After plummeting 6.53 percent to Rs 2,287 in intra-day trade, the stock ended at Rs 2,321.15, down 5.14 percent, on BSE. It was the worst performer in the 30-share Sensex team.
On NSE, shares of the company went down 4.85 percent to close at Rs 2,322.10.
The company's market valuation saw an erosion of Rs 24,797.12 crore to Rs 4,57,365.88 crore.
"For TCS and Infosys, Q2 is a high growth quarter and both the companies clock majority of incremental revenue in this quarter. With lack of momentum in the BFSI vertical, the chances of a strong Q2 2016-17 are dim... ," Edelweiss Securities said in a note.
On the volume front, 3.02 lakh shares of the company were traded on BSE and over 35 lakh on NSE during the day.
"Based on data at the end of August 2016, the company has characterised customer outlook as one marked by abundant caution, with some holding back of discretionary spending - particularly in the BFSI vertical in the US, resulting in a sequential loss of momentum," TCS said.
The US is the biggest market for India's USD 150 billion software outsourcing sector, followed by Europe.
Weakness was also seen in other IT counters, with Infosys falling 1.62 percent lower, Wipro (1.77 percent), HCL Tech (1.70 percent) and Tech Mahindra (2.61 percent).
The m-cap of Infosys was shaved off by Rs 3,927.11 crore while that of Wipro slipped Rs 2,074.65 crore, HCL Tech (Rs 1,870.93 crore) and Tech Mahindra (Rs 1,170.33 crore).
Taken together, these five IT firms lost Rs 33,840.14 crore in market valuation.
The BSE IT index, too, was quoting down 2.49 percent at 10,164.96.