Subdued performance and weak guidance from TCS and Infosys - India's top two software services companies have dragged its peers along with them, even before they declare their respective quarterly results.

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The Nifty IT index saw its biggest fall in three years on Monday. The steep fall in shares of technology companies have also brought down their valuation multiples below the ten-year averages.

Barring Tata Consultancy Services (TCS) and HCLTech, the top IT companies are currently trading at below their long-term averages.

Among the top IT firms based on market capitalisation, Wipro, L&T Technology Services and Infosys are trading at about 3.4 percent to 12.3 percent discount to their long term averages, according to Bloomberg data.

While the one-year forward price-to-earnings multiple of Wipro has almost halved from its December 2021 peak, the multiples of TCS and HCLTech have corrected by 30 percent during the same period.

Also Read: Infosys Q4 Results: Shares see biggest single-day drop in over three years after multiple downgrades

The top ten IT companies together lost more than one lakh crore of market capitalisation on Monday with Infosys alone contributing Rs 57,000 crore. On Monday, shares of Infosys plunged as much as 15 percent in intra-day trade, followed by LTIMindtree with a 10 percent drop. TCS and Wipro fell four percent each before recovering towards the close of trade..

As many as 15 analysts who track the Infosys stock on Bloomberg, including that of JPMorgan Chase & Co., Macquarie, Nomura Citigroup and CLSA have lowered their ratings on the stock post Q4 results.

Moreover, analysts are now the least bullish on Infosys since September 2017. As of Monday, 18.4 percent of the 49 analysts who track the stock on Bloomberg recommend a "Sell" against 10.2 percent before the Q4 results.

With Monday's fall, the Nifty IT index has declined six percent so far in 2023 after last years' 26 percent drop.

Also Read: Expect 1-2% revenue growth for Indian IT in Q1FY24, says Macquarie analyst

(Edited by : Hormaz Fatakia)