Infosys, Wipro ADRs drop 2-4% after Accenture cuts FY24 revenue guidance
At 11:59 am Eastern Time (ET), Wipro ADR was trading two per cent lower on the New York Stock Exchange (NYSE) at $5.86 while Infosys ADR was trading 3.9 per cent lower at $18.34.
Also Read: Accenture cuts FY24 earning forecast over uncertain consulting revenues
Consequently, this will keep IT stocks under investors radar on March 22 after the Nifty IT index broke its four-day losing streak today with the US Federal Reserve maintaining its rate cut projections for 2024.
Accenture slashes FY24 revenue guidance
Accenture now expects the full-year revenue growth in the range of one per cent to three per cent, from its earlier forecast of two per cent to five per cent. The company has been struggling with sluggish demand for its IT and consulting services over high interest rates.
Accenture reported revenue of $15.80 billion, slightly lower than analysts’ estimate of $15.84 billion. On an adjusted basis, the company earned $2.77 per share, compared with an estimate of $2.66 per share.
The company also forecast third-quarter revenue in the range of $16.25 billion to $16.85 billion, below an estimate of $17.01 billion, according to LSEG data. New bookings, a key indicator of future revenue, dropped two per cent to $21.58 billion for the second quarter, while revenue for its Communications, Media & Technology segment fell eight per cent year-over-year.
IT stocks in focus on March 22
IT stocks will be in focus during tomorrow’s trading session after Accenture’s lower earnings growth forecast with Infosys, Wipro witnessing a significant downtrend in their ADRs today.
US-rate sensitive IT companies, which have a significant reliance on US markets opened with gains on March 21, with the Nifty IT index breaking a four-day losing streak in today’s session, rising by 1.53 per cent to touch an intraday high of 36,296 points.
‘’Investors’ interest in the IT sector will fully revive only after client spending recovers in the US and earnings improve in the March quarter”, said Aishvarya Dadheech, chief investment officer at Fident Asset management.
The US Federal Reserve is presently holding interest rates at their highest level in 23 years, with the aim of gradually restoring inflation to the targeted two per cent over the long haul. Since March 2022, the US central bank has raised its policy rate by 525 basis points to the current range of 5.25 per cent to 5.50 per cent.
The tech-heavy Nasdaq led Wall Street rose on Thursday as chip stocks rallied following Micron Technology’s upbeat forecast, while investors took comfort in the Fed’s rate cut projections. At the opening bell, the Dow Jones Industrial Average rose 148.90 points, or 0.38 per cent, to 39,661.03 and the S&P 500 opened higher by 28.81 points, or 0.55 per cent, at 5,253.43.
‘’The buoyancy in the US markets is not only helping the index to cap the damage and also triggering a rebound in between. On the benchmark front, Nifty tested the immediate hurdle of short term moving average i.e. 20 EMA today but it couldn’t surpass it,” said Ajit Mishra, SVP – Technical Research, Religare Broking Ltd.
‘’We may see some consolidation now and need sustainability above 22,200 to mark any meaningful recovery. Meanwhile, Participants should stay stock-specific until we see clarity over the next directional move and stick with the index majors and large midcaps,” added Mishra.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 21 Mar 2024, 09:47 PM IST
