Indian IT companies are witnessing selling pressure in today's trading session ahead of TCS kickstarting the quarterly earnings season on Wednesday.

Share Market Live

NSE

The Nifty IT index is trading 1.3 percent lower with nine out of the 10 index constituents trading with losses.

In fact, TCS is the second-biggest loser on the IT index, trading with losses of nearly 1.7 percent. Infosys is off the day's low but is trading with losses of 1.5 percent.

Speaking of Infosys, a primary reason why the technology stocks are under pressure is owing to concerns about the company giving a weak guidance for financial year 2024. Compared to the 16-16.5 percent growth seen by the company in the financial year 2023, consensus expects a guidance of only 6-8 percent this time around.

Also Read: TCS Q4 Preview: Reliance on banking clients may keep earnings growth in check

Any number less than the 6-8 percent range will disappoint the street. However, consensus also expects infosys to raise the higher end of its EBIT margin guidance from 21-22 percent to 21-23 percent.

EBIT margin for Infosys may return to those levels in case attrition and wage inflation remain under control.

Another question doing the rounds is whether TCS would announce a buyback now that it is eligible to do so. However, the company may look to conserve some cash in an uncertain environment, especially after having declared a dividend of Rs 75 in the December quarter.

In case the company indeed planned on considering a buyback, it would have been part of its exchange announcement for the earnings board meeting.

The Nifty IT index is currently flat for the year.

Also Read: IT Earnings Preview: US, European banking crisis casts an uncertain gloom this quarter

(Edited by : Hormaz Fatakia)

First Published:Apr 11, 2023 2:47 PM IST