Cognizant causes jitters; IT stocks drop sharply

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Cognizant causes jitters; IT stocks drop sharply
Infosys: Quotes, News
BSE 873.50BSE Quote49.6 (5.68%)
NSE 873.40NSE Quote49.85 (5.71%)
IT major Cognizant, which is not listed on the Indian bourses has now spread panic among investors, who sold sharply in technology stocks today, after the company projected lower than expected revenues.

Cognizant sounded the alarm bells when it revised downwards full year revenue guidance, on "slower than anticipated acceleration in demand".

Infosys and Wipro had earlier confirmed that IT spends were down and had projected muted revenue guidance.

The Infosys stock was trading sharply lower by 3%, while TCS was down 4.19% and Wipro was down 3.19%, on the National Stock Exchange.

It's clearly going to be a tough few quarters for the IT sector given that the tough economic environment in Europe is worsening. The election results that have come in from France and Greece have further aggravated problems.

While economic greenshoots have emerged in the US over the last few quarters, Friday's jobs data, again caused disappointment, casting doubts over economic recovery. This is going to affect IT companies that may see lower IT budgets from clients.

Read more about: infosys, wipro
Story first published: Tuesday, May 8, 2012, 11:44 [IST]
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