Infosys, inflation hit market sentiment

The January-March quarter (Q4) results season, which started on a poor note with disappointing numbers from information technology bellwether Infosys, and macro-economic concerns triggered by high inflation numbers, continued to weigh on the Sensex, as it plunged 296 points or 1.53 per cent to close at 19,091.

The BSE Sensex and the NSE Nifty both closed near the low point of the day, adding to Friday's losses. The Sensex had earlier touched a day’s high of 19,649 and a day’s low of 19,071. It opened at 19,389. The NSE Nifty fell by 95 points to close at 5,729. Selling was seen across the board, with realty, IT,telecom and capital goods stocks among the major laggards.

All sectoral indices ended in the red. Even mid-cap and small-cap stocks were under pressure. Only five of 30 Sensex stocks ended with gains, with Hero Honda gaining the most at 1.8 per cent, to close at Rs 1,863.75.

Realty major DLF Ltd topped the Sensex losers, plunging 4.7 per cent to Rs 233.35, followed by Tata Consultancy Services Ltd at 3.4 per cent. TCS’ competitor, Infosys, which had triggered a market collapse on Friday, falling nine per cent, shed another 2.8 per cent to close at Rs 2,905.20. Analysts say the high inflation number reported last week leaves RBI with little choice, but to raise interest rates, a negative for equities.

“We believe the March reading has left RBI no choice but to continue its rate hiking cycle beyond the next meeting and adopt a hawkish stance in response to the pickup in core inflation,” said Vivek Rajpal of Nomura Financial Advisory and Securities (India).

Seshadri Bharathan, MD & CEO, KSEMA Fincon Ltd, said the global news flow was also not encouraging. “The ECB and its Chinese counterpart have both hiked rates. Sovereign debt concerns have resurfaced in the euro zone. The undercurrent in the Indian market has taken a hit. We expect markets to face some selling pressure.”