Infosys drags down market 300 points

TCS and Wipro pulled sensex down by another 30.91 points

Stock markets tumbled on Friday, led by a sell-off in Infosys shares after the company's revenue forecast disappointed investors. These overshadowed the optimism surrounding the better-than-expected industrial production figures.

The Sensex fell 299.64 points, or 1.62 per cent, to close at 18,242.56. The Nifty declined 65.45 points, or 1.17 per cent, to end at 5,528.55. Infosys was down 22.07 per cent to close at Rs 2,273.05 as the company suggested growth would be lower than analyst estimates for the financial year ending March 2014.

Infosys dragged down the Sensex by 355.86 points, while Tata Consultancy Services and Wipro pulled it down by another 30.91 points, according to data on the BSE website. Some of these losses were erased by gains in ITC, State Bank of India and HDFC Bank, which helped the Sensex recover and finally close at 18,242.56.

Information technology (IT) was the major loser of the day. The S&P BSE IT index was down 11.09 per cent on the back of the Infosys results and fears of what it means for other IT companies, according to analysts.

But for a pull-back from ITC, SBI and HDFC Bank and some short-covering, the decline in the benchmark indices would have been much sharper.

Deepak Jasani, head of retail research at HDFC Securities, suggested the poor show from Infosys negated the optimism from positive domestic macroeconomic cues.

"Technology and pharma were supposed to be insulated from the slowdown and outperformers in the current results season. The leader of technology pack has disappointed with numbers that have caused some nervousness in the market. Market participants will now have to find a new safe haven sector," he said.

Foreign institutional investors (FIIs) were net sellers by Rs 28.59 crore, while domestic institutional investors were net sellers by Rs 311.92 crore, according to provisional exchange data.

The S&P BSE FMCG was the best performer of the day, up 1.95 per cent. Indices tracking the power and banking sectors were up 1.02 per cent and 0.96 per cent, respectively.

"Some of the sectors that did well on Friday, including cement, banking and FMCG, could be on account of fund managers shifting out from technology to other sectors liked by them... FII flows have slowed down over the last few weeks. This could continue till the a large part of results season is over as they seem to be adopting a wait-and-watch approach," added Jasani.

Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance, noted there was positive news on the economy despite the fall on Friday.

"If you look at the index, its three-four stocks have led to the fall. The IIP (Index of Industrial Production) numbers did not disappoint and crude oil prices and inflation have been drifting downwards, which is also a positive," he said.

Retail inflation came in at 10.39 per cent for March, while IIP for February came in at 0.6 per cent. IIP was better than expectations, according to analysts, while CPI inflation snapped a five-month rising trend

Shardul Kulkarni, senior technical analyst, Angel Broking, said though a bounce could not be ruled out, the outlook is quite bearish from a six-month perspective.

"The near-term support for the Nifty is at 5,480. A weekly closing below 5,480 will unleash significant pain in Indian equities," he said.