Nifty IT slumps up to 3% amid year-end profit booking; Persistent Systems falls over 5%

Shares of information technology (IT) companies traded sharply lower on the last trading day of the year. At around 11:46 am, the Nifty IT index reflecting the performance of IT shares was down as much as 1.93 per cent at 43,124.8. At the day's low, the index slumped to levels of 42,574.45, marking a fall over over 3 per cent from the previous day's close at 43,971.4.

Of the 10 constituents, all traded in the red, with the maximum selling pressure in counters including Persistent Systems, Tech Mahindra and Mphasis. 

Persistent Systems despite a cut of nearly 4 per cent at the last count, is up over 12 per cent during the month, as against Nifty IT's surge of nearly 2 per cent. The stock last traded at Rs 6,380.75 per share on the NSE.

Other losers included Coforge, TCS, Wipro and Infosys -all down up to 2 per cent. 

Meanwhile, counters like LTIMindtree, HCL Technologies and L&T Technology Servies, saw a drag of between 0.6-1 per cent.

The Nifty IT index despite the global headwinds outperformed with a 1-year return at 21.5 per cent. In contrast, the headline Nifty50 is set to end the year with a return of around 9 per cent.

G. Chokkalingam, Founder-Equinomics said, "Year-end profit booking by FIIs in IT sector which gave impressive returns this year and also fear of the US Fed not reducing interest rates significantly in the short to medium terms led to this correction."

Elevated level of interest rates in US might impact the IT services orders to Indian companies, he added.

Atul Parakh, CEO of Bigul said, "Indian IT stocks were heavily sold during the last trading session of 2024, leading to a broad market correction in the Sensex and Nifty indices."

The analyst added that the sharp selling also reflects broader market concerns that are driving FII selling due to the high yields in US bonds and a strong dollar. The overall market sentiment remains cautious going into 2025, as stretched valuations and high uncertainty continue to hold domestic institutional investors and high-net-worth individuals back from further accumulation of positions, he added.

Therefore, the Q3 earnings season, beginning January 10th, will be key in pinpointing companies that can maintain performance even during the slowdown in growth, noted Parakh.

Q3 earnings season timeline

HCL Tech will kick-off the Q3 earnings season on January 13, 2025, followed by Bengaluru-headquarter Infosys which is set to announce its Q3 earnings on January 16.