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Information technology (IT) stocks took a hit in trade on Thursday, after TCS warned of a slowdown in discretionary spending in the BFSI (banking and financial services) vertical. The stock lost 6% in morning trade to hit a low of Rs 2,284 levels on the National Stock Exchange (NSE). The vertical contributed nearly 40% to the company’s revenues in the first quarter ended June 2016, reports suggest.
HCL Technologies, Tech Mahindra and Infosys were among the other losers that lost 2.2 – 2.6%. Wipro, at Rs 470.2 hit its 52-week low on the NSE in intra-day deals. A fall in these heavyweights dragged the Nifty IT index nearly 3% lower in intra-day deals on Thursday.
"TCS, raising a red flag, has disclosed lack of momentum in US BFSI spends and some early signs of weakness. On the positive side, though, Europe BFSI is doing well despite Brexit and management has maintained its commentary on rest of business/services verticals. The US caution clearly reiterates our thesis that TCS, with huge dependence on H1, has very little margin of safety," say analysts tracking the company at Edelweiss Research.