BENGALURU: Shares of Infosys Ltd slumped nearly 15% on Monday, dragging peers and the benchmark index, after the company’s dismal revenue outlook raised concerns about demand for Indian IT services amid a global banking turmoil and recession fears.

Infosys’ outlook last week followed a disappointing quarterly report from larger rival Tata Consultancy Services Ltd, highlighting worries for the sector which earns more than 25% of its revenue from the US and European banking, financial, services and insurance sectors.

The collapse of two mid-sized US lenders in March had left the financial ecosystem shaken, and drove an extraordinary government effort to reassure depositors and backstop the system.

“Some of the macro challenges, especially around banking, financial services and insurance (BFSI) has become bigger and that does mean project cancellations or delays in the deal decision cycle,” said Apurva Prasad, vice president of institutional research, HDFC Securities.

Prasad said he was expecting a sequential decline for companies like HCLTech Ltd, Wipro Ltd and Tech Mahindra Ltd on constant currency basis.

Infosys, India’s second-largest IT services firm, on Thursday said it expects revenue growth of 4%-7% on a constant currency basis for the year ending March 2024, well below analysts’ expectations of 10.7%, as clients cancelled projects and deferred spending on growing fears of a recession.

The previous slowest annual growth was a 5.8% increase in fiscal 2018. Infosys’ shares fell as much as 14.7% to 1,185.3 rupees in their biggest intraday percentage drop since October 2019.

Infosys triggers slide in Indian shares; IT stocks fall

The Nifty 50 shed as much as 1.4%, and the IT index fell over 7%.

The Bengaluru-based company’s net profit of 61.28 billion rupees ($748.21 million) in the January-March quarter also missed analysts’ expectations of 66.24 billion rupees, according to Refinitiv IBES.

Smaller rival HCLTech is due to report results later this week, while Wipro is expected next week.