American Depository Receipt (ADR) shares of India’s top information technology (IT) majors Infosys and Wipro traded lower on Wall Street on March 21 after Accenture slashed revenue growth guidance for FY24 amid uncertain economic environment that prompts clients to reduce spending on consulting services.
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.
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.
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Published: 21 Mar 2024, 09:47 PM IST