The Nifty IT index cracked over two percent in the morning trade, dragged by the sell-off seen in Wall Street's tech-heavy Nasdaq Composite index overnight. Further, weak earnings and poor guidance from IT services major Wipro Ltd. fuelled the selling.
Wipro shares sank over six percent, after the IT services major reported its Q4 results and slashed forward revenue guidance, prompting brokerages to downgrade the stock. Wipro's growth prospects looked uncertain amid a muted demand environment.
Wipro guided for a fall in revenue for the current quarter, with IT services revenue in the range of $2,505 million to $2,557 million, implying a sequential decline of 1.5 to 3.5 percent in constant currency terms.
Further, the information technology player discussed an uncertain deal environment, adding that the tariff-induced macro uncertainty is weighing on the demand in verticals like consumer and manufacturing, and has resulted in a pause of certain large transformation projects and impacted discretionary demand from clients.
This caused a rub-off effect on IT stocks that depend on U.S. for a large portion of their revenue. At 12 pm, the Nifty IT was down 1.5 percent in trade to hover around the 32,900 level, with Wipro, LTI Mindtree, HCL Tech leading the losses. The index trimmed its intraday losses, to rise around 400 points from lows.
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Adding to the pressure, an overnight sell-off in the tech-heavy Nasdaq Composite dampened sentiment, as investors grew cautious over tariff-related concerns and Federal Chair Jerome Powell's commentary.
Jerome Powell warned that trade tensions could spur inflation and emphasized that the central bank is in no rush to reduce interest rates. He added that the U.S. Federal Reserve must ensure tariffs don’t trigger a more persistent rise in inflation while warning that he expects continued volatility across financial markets.
This led to sharp selling pressure across Wall Street, leading all major indices to settle deep in the red. The tech-heavy Nasdaq index retreated three percent, led by a sell-off in Nvidia and other chipmakers on reports of further curbs on Chinese exports.
The local IT index often tracks cues from the mother market, adding to further pressure on domestic information technology firms.
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