Markets extend losses, IT battered

Heavy selling in the last leg of the trade in IT and Banking dragged markets lower. Markets ended the week in the red, Sensex closed near the day's low at 20,125, down 373 points and Nifty declined 115 points, at 6047.

Infosys results failed to sustain last two sessions IT rally. Tech stocks were beaten badly as the index dipped 3.5% after the IT bellwether reported 13% rise in net profit and also upped its guidance to 24-25% for FY11. Chief Financial Officer V. Balakrishnan said, “the continued global economic uncertainty, coupled with extreme currency volatility, is a concern for the industry.”  However analysts shrug of rising Rupee concerns on back of improved demand for outsourced services,"Strong business momentum and other operating levers will take care of the appreciating rupee and rising wages," Sanghavi said.

On the BSE sectoral chart all the indices closed in the red. The least affected were Realty, Power down 0.9% each.

Investors have started locking in profits ahead of Rs 15,000 cr Coal India IPO which will hit the street next week."Coal India’s Initial Public Offer (IPO) will be a game changer, and the markets will correct post that. Most of the money that is coming in is “hot money". The day this money goes out, the markets will slide," Ambareesh Baliga, Vice President, Karvy Stock Broking said.

Although markets are in a bull-trend, minor hiccups cannot be ruled out."Our outlook for the longer term is bullish, at the same time markets are likely to be volatile in the medium term," according to Vaibhav Sanghavi, Director of Equities at Ambit Capital. Even Baliga from Karvy Stock Broking expects Nifty to be around 4,800 – 5,000 levels, which is 20% lower than current levels.

Heavy selling is also seen in the banking stocks on back of global sell-off in financials due to growing concerns that foreclosure problems in the United States could seep into broader financial markets. Axis Bank fell over 2% on restricted profit growth in the September wquarter on back of margin pressure.

Results season was kickstarted on a positive note, analysts expect 20% earnings growth for FY10-11. "20% growth in corporate earnings in FY10-11 is given,and some sectors like auto, banking and commodities (metal and non-ferrous), may grow over 20-25%," Deven Choksey, MD, KR Choksey Shares and Securities said.

In the broader markets, the smllcap index shed 0.7% and closed at 10,737 while the midcap index shut shop at 8,435 losing 1.2%. Meanwhile, the benchmark index underperformed throughout the day and finally closed at 1.8% in the negative.

NTPC (Rs 203) up 0.3% was the only gainer in the Sensex - 30 stocks.

The major losers in the main index were Wipro (Rs 473), TCS (Rs 951) down 3.5%, Infosys (Rs 3076), Hero Honda (Rs 1802), Bharti Airtel (Rs 334) and SBI (Rs 3164)shed 3% each. Maruti Suzuki (Rs 1508), Reliance Communications (Rs 175), DLF (Rs 374) losing 2.5% were the other major losers.

The market breadth was very negative. 2022 stocks had declined while 977 had advanced.