Persistent Systems and Infosys shares fell up to two percent in trade on May 31 after the information technology major Salesforce lowered its guidance for FY25.
Salesforce stock plummeted 19 percent in its shares during after-hours trading. This decline followed the company's report of lower-than-anticipated revenue and margin guidance that fell short of Wall Street's projections.
As a result, the two domestic IT firms, Persistent Systems and Infosys, which have highest employee and revenue exposure towards Salesforce, saw their shares fall in trade on May 31.
At 10.50 am on May 31, Persistent Systems stock price was lower by two percent on the NSE at Rs 3,447. Infosys shares were quoting at Rs 1,412 apiece, down 1.1 percent compared to the previous close.
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According to the Salesforce management, the earnings show for the quarter ended June will be impacted by poor client spends on Salesforce's cloud and enterprise business products.
The operating margin is expected to clock in at 19.9 percent, lower by 50 basis points from the previous forecast of 20.4 percent.
Brian Millham, Salesforce COO and president, noted that there was increased scrutiny in clients' budgets and deal cycles were taking longer than usual.
International brokerage CLSA reiterated its cautious stance on the Indian IT sector. Domestic IT players have built significant capabilities around Salesforce.
The brokerage has a 'sell' call on LTIMindtree and Wipro, each with a 5 percent stake in Customer Relationship Management (CRM) operations.
CLSA also has an 'accumulate' rating Infosys while recommending 'sell' on Persistent Systems.
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