Shares of information technology (IT) companies are trading weak for second day in a row ahead of Tata Consultancy Services (TCS) financial results for the quarter ended September (Q2FY19) today.
At 09:39 am; Nifty IT index was down 3.3% at 14,648 points as compared to 2.6% decline in the Nifty 50 index. The IT index tanked 5% in past two trading days against 1.2% fall in the benchmark index.
TCS, Infosys, HCL Technologies, NIIT Technologies, Mindtree, Tata Elxsi and Infibeam Avenues from the Nifty IT index were trading lower in the range of 3% to 7% on the NSE today.
The brokerage firms expecting TCS to continue with its good performance in the second quarter of FY19 as well. The IT services firm had posted 23.5% rise in its consolidated net profit at Rs 73.62 billion, while in sequential terms, the net profit grew 6.3% for the first quarter ended June 2018 (Q1FY19).
Valuations of TCS are rich and company needs to guide for continued strength in revenue growth in 2HFY19 (October-March) as well for the stock to retain momentum. TCS stock is up 50% in last six months.
Prabhudas Lilladher expects Tier 1 IT vendors to show a steady execution in Q2FY19. TCS/Infosys/HCL Technologies are expected to deliver steady results while Wipro/Tech Mahindra could report softer USD revenue growth.
“Constant currency revenue growth for the quarter would be in the band of 0.5-3.5% QoQ for 2QFY...