IT stocks trade lower as Cognizant cuts 2019 revenue guidance

At 1121 hrs, the Nifty IT index was trading at 16,191.35, down 1.29 percent. All the constituent stocks are trading in the negative, with TCS being the biggest loser, down 2.05 percent.


Information technology (IT) stocks were trading in the negative intraday on May 3 after the US-based IT services company Cognizant almost halved its 2019 revenue forecast after missing first-quarter results estimates, on the back of muted demand for its financial and healthcare businesses.

At 11:21 hrs, the Nifty IT index was trading at 16,191.35, down 1.29 percent. All the constituent stocks were trading in the negative, with TCS being the biggest loser, down 2.05 percent.

Other major losers were, Tech Mahindra and HCL Technologies, down 1.68 percent and 1.51 percent, respectively.

The index was the biggest sectoral loser on NSE.

Cognizant forecast 2019 revenue growth in the range of 3.6 percent and 5.1 percent in constant currency terms, compared with between 7 percent and 9 percent earlier.

Chief Financial Officer Karen McLoughlin said the company was seeing some cautiousness in the banking sector around levels of spending in the second half of the year.

The company's reliance on the financial services sector has been weighing on its overall revenue growth in the past few quarters.

Revenue in its financial services unit fell 1.7 percent to $1.44 billion in the first quarter, while healthcare services revenue rose nearly 4 percent to $1.17 billion but missed the $1.20 billion forecast by three analysts polled by Refinitiv.

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