IT stocks fell steeply on Tuesday after New Jersey-based Cognizant Technology Solutions' December quarter earnings announcement overnight.
The sub-index of IT stocks on the Bombay Stock Exchange drooped 3.5 per cent, underperforming the 1.2 per cent fall in the broader Sensex. Leading edge IT stocks such as Infosys and Tata Consultancy Services were among the top losers in the 50-share Nifty index.
Cognizant has target revenue of $3.18 billion-$3.24 billion for the three months ending March 2016. The top end of the revenue range shows an 11.34 per cent year-on-year growth in the March quarter, its slowest in 14 years since the March quarter of 2002.
For the 2016 calendar year, Cognizant expects revenue growth to be in 10-14 per cent range, sharply lower that the 21 per cent revenue growth the company reported in 2015.
Cognizant's healthcare unit, which has been driving force behind the company's growth, decreased to the lowest in five quarters. The most worrying part of Cognizant's annual guidance is prospect of weak growth in the key BFSI (banking, financial services and insurance) space, experts believe.
The selloff in IT stocks is seen at a time when broader markets have been bogged down by turmoil across global stocks markets.