Infosys' shares on Monday slumped over 9 per cent after the company's quarterly results announced last week showed weaker-than-expected Q4 results, highlighting the turmoil in the banking sector and its impact on major global markets. Infosys' stock closed 9.40 per cent down at the BSE at Rs 1,258.10. In today's session, its biggest intraday percentage drop since October 2019, Infosys touched a low of Rs 1,185.30. The IT major's stock also dragged its peers and domestic equities as Sensex tanked over 519 points, while Nifty plunged nearly 0.70 per cent to 17,702. On the other hand, Nifty IT index slumped 4.71 per cent, and Tech Mahindra tanked 5.23 per cent, followed by HCLTech at 2.82 per cent, Wipro at 1.66 per cent, and TCS at 1.56 per cent. Infosys' dismal quarterly results, followed by that of its rival Tata Consultancy Services (TCS), highlighted the IT sector's woes, as the companies earn over 25 per cent of their revenue from the US and European banking, financial, services and insurance sector, according to Reuters. The collapse of the US's Silicon Valley Bank, followed by Signature Bank in mid-March has led to a banking crisis in the nation. Infosys on Thursday announced that the company saw a 7.8 per cent year-on-year rise in consolidated net profit at Rs 6,128 crore in the March quarter of FY23. It gave a 4-7 per cent revenue growth forecast for FY24 amid macroeconomic uncertainties. The Bengaluru-based IT major also logged a 16 per cent YoY growth in consolidated revenue in Q4FY23 at Rs 37,441 crore. The markets were closed on Friday on account of Ambedkar Jayanti. Kotak Institutional Equities, in a report on the IT sector's performance published on Monday, stated that the reasons for the decline were a pause in discretionary programs and even cancellations. "Our structural view on margins and growth has not changed, even as we recognise elevated headwinds that could feed into multiples in the near term. Stocks to avoid are the ones trading at premium multiples after assuming elevated growth and margin assumptions," the report added. It further said, "After a slow start in January, projects were paused/cancelled in February and it continued in March. The banking crisis in US regional banks and European banks in March 2023 has induced greater caution and could impact the June 2023 quarter. We would not be surprised by a weak US performance across companies that are likely to report in the coming days." (With Reuters input)
