IT stocks slip; TCS, Wipro fall over 1% as rupee hits one-month high

IT stocks slip; TCS, Wipro fall over 1% as rupee hits one-month high

Shares of information technology (IT) services were trading in the red in the early trade on Tuesday as the rupee hit around one month-high against the US dollar. The domestic currency opened at 70.96 against Monday's close of 71.04.

At 09:51 am, the Nifty IT index was trading over a per cent lower at 14,977 levels with all the 10 constituents in the negative territory. Justdial was the biggest loser in the pack, sliding nearly 3 per cent, followed by Mindtree, Tata Consultancy Services (TCS), and Tech Mahindra - falling up to 2 per cent In comparison, the benchmark Nifty50 index was trading over 16 points or 0.13 per cent lower at 11,921.

For the recently-concluded September quarter, large-cap IT services firms delivered a mixed performance. While HCL Tech, Tech Mahindra and Infosys outperformed in revenue growth and margin, TCS missed estimates on both revenues and EBIT margin. Wipro delivered a stable performance for the quarter. Digital continued to drive revenue growth momentum (albeit Digital YoY growth momentum has moderated) while traditional business remained weak owing to the deflationary impact, according to Centrum Broking.

Analysts at Emkay Global Financial Services continue to prefer Tier I IT companies to midcaps; however, they maintain 'underweight' stance on the sector. According to them, the emerging industry trends around the reversal of the multi-year trend of greater on-shoring and maturity of Digital spending with more integrated deals along with core transformation initiatives put players with scale at an advantage compared with Tier-II techs.

HCL Tech is the only Buy-rated stock under the brokerage coverage. "Although valuations of Infosys have come off recently after the whistleblower complaint, making it an interesting tactical Buy trade, we believe risks from any management churn need to be watched out," it said in a report dated November 21.