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American Depository Receipt (ADR) shares of India’s leading information technology (IT) companies Infosys and Wipro traded lower on Wall Street on Thursday, March 21 after Accenture cut its growth guidance revenue for FY24 amid an uncertain economic environment leading clients to reduce spending on consulting services. .
At 11:59 am ET, Wipro ADR was trading two percent lower on the New York Stock Exchange (NYSE) at $5.86, while Infosys ADR was trading down 3.9 percent less at $18.34.
Also read: Accenture cuts its FY24 profit forecast on uncertain consulting revenue
Consequently, this will keep IT stocks under the radar of investors on March 22 after the Nifty IT index today broke its four-day losing streak and the US Federal Reserve maintained its cut projections of rates for 2024.
Accenture slashes FY24 revenue forecast
Accenture now expects full-year revenue growth in the range of one percent to three percent, from its previous forecast of two percent to five percent. The company has been struggling with slow demand for its IT and consulting services due to high interest rates.
Accenture reported revenue of $15.8 billion, slightly below analyst estimates of $15.84 billion. On an adjusted basis, the company earned $2.77 per share, compared to 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, fell two percent to $21.58 billion in the second quarter, while revenue from its Communications, Media and Technology segment fell eight percent year over year.
Also read: US Federal Reserve keeps benchmark rates steady at 23-year high, projects three rate cuts in 2024: Five highlights
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, and Wipro witnessed a major downtrend in its ADRs today.
US interest rate-sensitive IT companies, which are significantly dependent 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 1.53 percent to reach an intraday high of 36,296. points.
”Investor interest in the IT sector will fully revive only after customer spending in the US recovers and earnings improve in the March quarter,” said Aishvarya Dadheech, chief investment officer. from Fident Asset Management.
The US Federal Reserve currently maintains interest rates at their highest level in 23 years, with the goal of gradually restoring inflation to the long-term target of 2 percent. Since March 2022, the US central bank has raised its policy rate by 525 basis points to the current range of 5.25 percent to 5.50 percent.
Wall Street’s tech-led Nasdaq rose on Thursday as chip stocks rallied following Micron Technology’s upbeat forecast, while investors took solace in the Federal Reserve’s rate cut projections. At the opening bell, the Dow Jones Industrial Average rose 148.90 points, or 0.38 percent, to 39,661.03 and the S&P 500 opened up 28.81 points, or 0.55 percent, to 5,253.43.
”The dynamism of the US markets is not only helping the index limit the damage but is also causing an intermediate rebound. On the benchmark front, Nifty tested the immediate hurdle of the short-term moving average i.e. 20 EMA today but could not overcome it,” said Ajit Mishra, Senior Vice President, Technical Research, Religare Broking Ltd.
”We may see some consolidation now and need sustainability above 22,200 to mark a significant recovery. Meanwhile, participants should continue to focus on equities until we see clarity on the next directional move and stick with major and mid-cap indices,” Mishra added.
Disclaimer: The opinions and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to consult certified experts before making any investment decisions.
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