India's top five IT firms saw a whopping Rs.40,000 crore loss in their market value during 8th Sep's trade.
This sudden slump in the stocks comes in the wake of tech giant Tata Consultancy Services issuing a weak revenue guidance.
A major chunk of the investors have attributed the revenue warning to reflect the IT sector's state, resorting to panic selling.
IT firms lose Rs.47,000 crore in market capitalization
TCS warns on weak revenue forecasts
Tata Consultancy Services stated that the company was cautious about its profit forecasts, and highlighted that there could be a decreasing momentum in the business.
India's biggest IT company soon saw its shares drop 6.53%, its biggest since 17 October 2014.
Which firms are hit?
After TCS issued the warning on dwindling profits to the exchange, it stated that more details on the outlook is expected next week.
The software giant lost a massive Rs.31,533 crore in market value, while its peers Infosys and Wipro lost Rs.6,098.38 crore and Rs.2,754.14 crore respectively.
HCL Technologies saw its market value drop by Rs.4,928.95 crore and Tech Mahindra by Rs.1,518.71 crore.
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Looking forward: IT firms to witness pressure on their stocks
There is no problem in the fundamentals of the India's IT companies but they will see some pressure of these stock till these companies completely transform into the new business area," said Deven Choksey, head of an investment company.
What do market experts say?
With the lowered revenue guidance being issued by India's top IT player, market experts state that companies like Cognizant, TCS and Infosys are dependent on their BFSI division unlike others.
Due to their high reliance on this segment, any decrease in banking profits would hit the companies.
Brokerage companies like Credit Suisse and Edelweiss stated that they would opt for HCL and Tech Mahindra.
IT firms' US divisions hit revenue
"We were expecting some kind of negative reaction in the BFSI segment from the UK and euro zone post Brexit, but it is showing up in the US", said Sandip Agarwal of Edelweiss Financial Services.
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