IT stocks fall after Cognizant cuts revenue guidance

IT stocks fell by as much as 3 per cent on Thursday after Cognizant lowered its full year revenue guidance to at least 14 per cent, from 16.5 per cent earlier, indicating that the sector may face some challenges ahead.

Shares of top IT services providers TCS and Infosys fell by 2 per cent on the Bombay Stock Exchange (BSE).

Wipro lost 2.86 per cent, while HCL Tech went down by 2.19 per cent and Hexaware Tech 1.27 per cent.

Cognizant had on Wednesday reported a healthy 24 per cent jump in net profit at US $ 371.9 million for the quarter ended June 30, but struck a cautious note as it lowered the full year revenue guidance.

"Due to weakness at certain clients and longer than anticipated sales cycles for certain large integrated deals, we are adopting a more conservative stance for the remainder of the year and revising our 2014 revenue guidance to growth of at least 14 per cent over the prior year," Cognizant CEO Francisco D'Souza had said.

The New Jersey-based firm, which has big operations in India, also expanded its stock repurchase programme by US $ 500 million to US $ 2 billion.

In India, it has global delivery centres in Mumbai, Bangalore, Chennai, Coimbatore, Gurgaon, Hyderabad, Kerala, Kolkata and Pune.

Overall, the company's revenue for the second quarter of 2014 rose by 16.5 per cent to US $ 2.52 billion, from USD $ 2.16 billion a year ago.