TCS' muted Q3 show sends IT pack lower

Mumbai: Traders added fresh bearish bets on Tata Consultancy Services (TCS) and other information technology stocks after third-quarter earnings by India's largest software services company hinted at near-term headwinds and growth slowdown for the IT sector in the months ahead.Shares of TCS declined 1.01% on the BSE to close at ₹3,286.20. The stock fell more than 3%, almost wiping out the previous day's gains. Nearly 4 million shares exchanged hands on the BSE and NSE on Tuesday compared with an average daily volume of 1.7 million shares on both exchanges over the past month.Net open interest - the total number of outstanding positions - in TCS' stock futures rose by nearly 1%, or roughly 50,000 contracts, indicating a build-up of fresh bearish bets, showed provisional data from stock exchanges.Infosys, which is due to announce its third-quarter earnings on Friday, saw a near 2% increase in the net open interest across all its contracts, while HCL Technologies - also due to announce its Q3 earnings on Friday - saw traders cut their bullish bets by 1%, or approximately 100,000 contracts, across all expiries. 96895921"The Street was not expecting these numbers from TCS. So let's hope others (IT firms) do not disappoint," said Gaurang Shah, senior vice president at Geojit Financial Services.The BSE IT index closed almost 0.8% lower on Tuesday after falling as much as 1.5% earlier in the day.Shah believes the cautious outlook on the sector could quickly change if other companies surprise the market with their earnings."I do not think this is going to be an everlasting scenario. I believe it is a great time to accumulate IT stocks if one chooses to look beyond the next three-six months' time horizon," he said.Most brokerage firms maintained their cautious outlook on TCS after the company reported its December quarter earnings. Citigroup and JP Morgan maintained their bearish view rating on the stock with a target price of ₹2,990 and ₹3,000, respectively. Citigroup finds it difficult to see an upside on the TCS stock that trades at around 25 times its one-year forward earnings, while JP Morgan said the current valuations were unjustified against a backdrop of deteriorating macroeconomic conditions.However, Nomura has the lowest of all price targets at ₹2,850, implying a nearly 14% fall from the current levels.

TCS' muted Q3 show sends IT pack lower
Mumbai: Traders added fresh bearish bets on Tata Consultancy Services (TCS) and other information technology stocks after third-quarter earnings by India's largest software services company hinted at near-term headwinds and growth slowdown for the IT sector in the months ahead.Shares of TCS declined 1.01% on the BSE to close at ₹3,286.20. The stock fell more than 3%, almost wiping out the previous day's gains. Nearly 4 million shares exchanged hands on the BSE and NSE on Tuesday compared with an average daily volume of 1.7 million shares on both exchanges over the past month.Net open interest - the total number of outstanding positions - in TCS' stock futures rose by nearly 1%, or roughly 50,000 contracts, indicating a build-up of fresh bearish bets, showed provisional data from stock exchanges.Infosys, which is due to announce its third-quarter earnings on Friday, saw a near 2% increase in the net open interest across all its contracts, while HCL Technologies - also due to announce its Q3 earnings on Friday - saw traders cut their bullish bets by 1%, or approximately 100,000 contracts, across all expiries. 96895921"The Street was not expecting these numbers from TCS. So let's hope others (IT firms) do not disappoint," said Gaurang Shah, senior vice president at Geojit Financial Services.The BSE IT index closed almost 0.8% lower on Tuesday after falling as much as 1.5% earlier in the day.Shah believes the cautious outlook on the sector could quickly change if other companies surprise the market with their earnings."I do not think this is going to be an everlasting scenario. I believe it is a great time to accumulate IT stocks if one chooses to look beyond the next three-six months' time horizon," he said.Most brokerage firms maintained their cautious outlook on TCS after the company reported its December quarter earnings. Citigroup and JP Morgan maintained their bearish view rating on the stock with a target price of ₹2,990 and ₹3,000, respectively. Citigroup finds it difficult to see an upside on the TCS stock that trades at around 25 times its one-year forward earnings, while JP Morgan said the current valuations were unjustified against a backdrop of deteriorating macroeconomic conditions.However, Nomura has the lowest of all price targets at ₹2,850, implying a nearly 14% fall from the current levels.