The company cut its revenue guidance to 1%-3.5% on a constant currency basis from the previous 4%-7%.

Shares of the company dropped most since April 17, leading losses in the benchmark Nifty 50 index. Infosys Chief Executive Salil Parekh attributed the guidance cut to delays in decision-making by clients. Reduction in discretionary spending from clients amid global inflation pressure and recession fears have acted as headwinds for Indian IT service providers.

“Overall, Infosys guidance cut reflects tough macro environment leading to weakness in IT services spending in the near term,” PhillipCapital Institutional Equity Research said.

The brokerage downgraded its rating of Infosys’ stock to “neutral” from “buy” with a price target of 1,390 rupees. Last week, market leader Tata Consultancy Services warned of an uncertain demand environment, while smaller peers HCLTech and Wipro reported and projected muted growth.

JM Financial said Infosys’ management erred on the side of optimism with its earlier guidance of 4%-7%, adding the guidance cut is more a course correction than a sign of incremental deterioration in the demand environment.

($1 = 82.0440 Indian rupees)

(Reporting by Varun Vyas in Bengaluru; Editing by Sohini Goswami)