Markets extend losses weighed down by IT shares

Benchmark indices have extended the losses amid sharp sell off in Infosys shares after the IT major reported disappointing Q4 numbers and lower-than-expected guidance for FY14.

Meanwhile, Industrial production was at 0.6% in February from a year earlier, government data showed on Friday. Manufacturing, which constitutes about 76% of industrial production, grew 2.2% from a year earlier, the federal statistics office said.

India's annual consumer price inflation slowed to 10.39% in March from the previous month, government data showed on Friday.

By 1250 hrs, Sensex plunged by 321 points at 18,221, and the Nifty down 76 points or 1.37% at 5,518 levels.

Says Kunal Bothra, Technical Analyst, LKP Securities, “The markets are becoming extremely volatile, gains of two sessions get evaporated in just the opening of one session. Support of 5450 is a crucial support, which could probably bring some buying on Nifty. But if this level gets breached convincingly then even a sharp correction till 5200 could be likely.”

On the global front, Asian shares were trading mixed with Nikkei recovering from its early lows. The Nikkei had rallied in the past few sessions after the Bank of Japan decided to infuse $1.4 trillion to boost the economy. The Nikkei was down 0.6% and Shanghai Composite slipped 0.2% while Hang Seng and Straits Times were trading with marginal gains.

Back home, the rupee trimmed its initial gains against the American currency but was still quoted up by two paise to 54.49 per dollar on mild selling of dollars by banks and exporters on the back of lower dollar overseas.

On the sectoral front, BSE IT index has slumped over 10% followed by counters like TECk, Realty, Capital Goods, Auto, Consumer Durables and metal, all slumping between 0.1-8%. However, BSE FMCG index has gained by nearly 2%.

Shares of information technology (IT) companies are trading lower 2-18% after Infosys said its consolidated revenues are expected to grow between 6-10%, a much below than Nasscom’s 12-14% industry growth expectations for the current fiscal 2013-14 (FY13-14). Infosys slumped 19.35%, Wipro slipped 5% and TCS was down 2%.

Auto majors such as Maruti Suzuki, M&M and Tata Motors which had gained recently witnessed profit taking are down 1% each.

Other notable losers include Sterlite, L&T, Coal India, JSPL, GAIL, ICICI Bank and Bharti Airtel.

However, defensive shares bucked the weak trend with FMCG shares among the top gainers. ITC and Hindustan Unilever are up between 1-2.5%.

Among other shares, Linde India (formerly BOC India) is locked in lower circuit of 5% at Rs 270 on NSE after UK –based parent company, The BOC Group, announced its plan to reduce stake in the company from the current 89.48% to comply with the Securities and Exchange Board of India (SEBI) norms on minimum public share holding requirements.

The market breadth in BSE remains weak with 1,232 shares declining and 759 shares advancing.