TCS closed at Rs 1,300.40, down 3.02 per cent, on the BSE after company’s top officials admitted weak earnings for the second quarter. On Monday in an Analyst meet, the CFO and Executive Director of TCS, S. Mahalingam, said: “Tata Consultancy Services Ltd is likely to post a lower growth in business volume for July-September as against the 5.3 per cent rise it saw in April-June.” Analysts also said the unfavourable rupee movements in this quarter could impact its dollar revenue growth.

The reasons for lower performance include fresher’s joining during the quarter, ramping up of projects from India and APAC geography which are of lower margins and marginal shifts to onsite for new deal starts.

“TCS has decided to invest the benefits of rupee depreciation in pursuing lower-margin strategic deals that may not have met its margin threshold earlier,” said a report from Angel Broking, while maintaining a ‘neutral’ view on the stock.

As investors shift focus to riskier rate sensitive stocks, defensive stocks such as IT, FMCG and pharmaceuticals take a back seat. So now, even one negative news can have an impact on the stock, said an IT analyst at a leading brokerage.

The IT index was down 0.54 per cent on the BSE.

(This article was published on September 18, 2012)
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