TCS results spoil fun at infotech carnival on SEs

Written by Markets Bureau | Mumbai, Apr 22 | Updated: Apr 24 2008, 04:43am hrs
The lower-than-expected numbers posted by infotech major Tata Consultancy Services (TCS) for the recently-concluded quarter took a heavy toll on its stock price on Tuesday, with the stock falling close to 11% on both major stock exchanges, the BSE and the NSE. In percentage terms, the stock fell the most since its listing in 2004, as the company posted the lowest growth in profits in the last three years. The TCS heat was felt across other tech stocks as well. This resulted in profit booking in IT stocks overall. Till recently, IT stocks were in the limelight following Infosyss robust earnings forecast.

Experts believe the looming US financial crisis has caused a slowdown in the US economy and that has impacted the TCS topline. Further statements from the management regarding order deferrals from some banking and finance firms which constitute a major chunk of the companys order book have also dampened investor sentiments. On the Bombay Stock exchange (BSE), TCS stock lost Rs 105.50, or 10.63%, to close the day at Rs 887.05 after reaching a high of Rs 980 and a low of Rs 881.15. Around 8 lakh shares of the company were traded on the BSE as against its two-week average of 3.4 lakh shares. Apurva Shah, head of research institutional equities, Prabhudas Lilladher Securities said, Investors had anticipated better results from Indias biggest software company TCS and as it disappointed them, investors started to dump the stock, worrying about its future earnings prospects. Also, the stock had run up a bit in the last few weeks, so some profit-booking was also witnessed in todays trade.

Some analysts also believe that a lack of clarity of the order book for the company and the lower performance for the fourth quarter compared to peers was a matter of concern as a section of analysts felt the company was excessively dependant on the US markets. Stocks of other IT companies also fell on Tuesday, with Wipro and Satyam Computers falling by more than 5% to end the day at Rs 430.70 and Rs261.60 respectively. The broader BSE-IT index was the worst performance amongst the sectoral indices, and fell 177.67 points or 4.32% to finally end the day at 3,930.47 points. Meanwhile, the benchmark Sensex, after remaining range-bound, closed the day on a marginally positive note at 16,783.87 points, adding 44.54 points or 0.27%. The broader S&P CNX Nifty added 12.30 points or 0.24% to close the day above the psychological mark of 5K at 5,049.30 points.