Infosys Ltd shares slumped nearly 15 per cent on Monday, dragging peers and the benchmark index, after the company's dismal revenue outlook raised concerns about demand for Indian IT services amid global banking turmoil and recession fears.

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

The collapse of two mid-sized US lenders in March had left the financial ecosystem shaken and driven 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.

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Among the Sensex firms, Infosys emerged as the biggest laggard, falling nearly 12 per cent after the company reported lower-than-expected growth in the fourth quarter net profit and gave a weak 4-7 per cent revenue growth guidance for FY24 amid the tightening of IT budgets by clients following a turmoil in the US banking sector.

Sensex, Nifty fall over 1% dragged down by IT counters; Infosys tumbles nearly 12%

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

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

The previous slowest annual growth was a 5.8 per cent increase in fiscal 2018.

Infosys fell as much as 14.7 per cent to ₹1,185.3 on Monday in its biggest intraday percentage drop since October 2019. The Nifty IT index dropped as much as 7.6 per cent.

Bengaluru-based Infosys' net profit of ₹61.28 billion ($748.21 million) in the January-March quarter also missed analysts' expectations of ₹66.24 billion, according to Refinitiv IBES. Smaller rival HCLTech is due to report results later this week, while Wipro is expected next week.

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