Infosys shares plummet as much as 10%: Here's what happened
The Indian stock market has had multiple record highs in the last few trading sessions. However, things turned out to be much different today. The equity market witnessed a bloodbath in early trading, courtesy of IT stocks. Indian IT major Infosys led the carnage by falling nearly 10%. Let's see what caused Infosys's shares to plummet.
Why does this story matter?
Indian IT stocks, like their global peers, have been under pressure for a while. Most of the major companies, including Infosys and TCS, put up a dismal performance in the last quarter of FY23. The poor show was expected to continue in the first half of FY24. IT stocks have shown signs of recovery, but a fall was inevitable.
Infosys cut its FY24 revenue guidance
Infosys's fall isn't unexpected. It became evident the moment the company announced its results for the first quarter of FY24. The market was expecting more from the firm after a poor Q4FY23. However, Infosys's earnings had exactly what people did not want to hear—a downward revision in revenue guidance. It cut its FY24 revenue guidance to 1-3.% from the earlier suggested 4-7%.
Infosys shares fell by 8.41% on NYSE
Infosys's poor outlook meant that the market would react by selling shares. After the guidance, the company's share price on the New York Stock Exchange (NYSE) fell 8.41% to close at $16.22. The Indian market took a cue from the US and started selling the firm's shares. Infosys is currently trading at Rs. 1,330 per share, down by 8.2%.
Indian IT companies are dealing with tepid demand
Some analysts believe that even Infosys's current guidance is aggressive. They think the company won't have any growth in the current financial year. Infosys's poor outlook indicates the challenges faced by India's IT majors. They are dealing with a tepid demand for outsourcing services due to macroeconomic challenges. The growth projection is the company's lowest in over a decade.
Infosys's poor guidance affected other IT companies
Infosys's revised guidance affected other IT stocks as well. Investors saw it as a sign of a weakening IT sector. The firm's peers, including TCS, Wipro, HCL Tech, and Tech Mahindra, opened in red. Nifty IT is currently down by 3.66%. Infosys's fall has the potential to drag down Nifty, as it has a 5.9% weightage in the index.
