India's Infosys Technologies said quarterly profit rose 18%, in line with forecasts, but its shares fell 7% on investor concern over a rising rupee, soaring wages and a U.S. slowdown.
Nasdaq-listed Infosys, which ranks behind Tata Consultancy Services (TCS) in India's $31.4 billion software services export industry, forecast a 19.4-19.8% revenue increase in rupee terms in the year to March, up from an earlier estimate of a 16.9-18.3% rise.
"The earnings indicate it's getting difficult for even a big company like Infosys with the dollar getting weaker," said Neeraj Dewan, director at Quantum Securities.
Infosys, TCS and third-ranked Wipro have been winning big outsourcing contracts from Western firms seeking to cut costs.
But investors have shunned the sector amid worries about the effect of the rupee hitting 9-½ year highs against the dollar, rising wage costs and a possible slowdown in a U.S. economy buffeted by the subprime mortgage crisis.
Sentiment had been picking up, with Infosys shares up this month at Wednesday's close on hopes of stronger earnings, but investors were disappointed when September quarter profit only matched forecasts, and the outlook was seen as muted.