Markets fall amid IT, FMCG earnings disappointment; Sensex down 543 points

Domestic equity markets closed lower due to a sell-off in heavyweight stocks like Reliance Industries, HDFC Bank, and Infosys, amid weak earnings from IT and FMCG sectors

Domestic equity benchmarks closed lower on Thursday, weighed down by selling in heavyweight stocks like Reliance Industries, HDFC Bank, and IT majors. 

 

Investor caution prevailed amid ongoing India-US trade negotiations and mixed corporate earnings.

 

The Sensex settled at 82,184, down 543 points, or 0.6 per cent, while the Nifty closed at 25,062, dropping 158 points, 0.6 per cent. The selloff erased ₹2.2 trillion from the total market capitalisation, which is now at ₹458 trillion.

 

Reliance Industries, HDFC Bank, and Infosys contributed most to the Sensex decline. IT stocks faced significant pressure after mid-tier firms, Coforge and Persistent Systems, reported weaker-than-expected quarterly results. 

 

 

The Nifty IT index plunged 2.2 per cent – its sharpest single-day fall since May 13 – despite Infosys beating earnings estimates.

 

"IT firms show anaemic revenue growth and profit degrowth, making current valuations unsustainable. Minimal recruitment signals limited near-term upside. Without a dramatic turnaround, these valuations won’t hold," said UR Bhat, Co-founder of Alphaniti Fintech.

 

The Nifty FMCG index fell 1.1 per cent with shares of consumer giant Nestle India dropping over 5 per cent, as its profit fell amid rising raw material costs and expenses.  

 

The market’s cautious tone persisted even as India and the UK signed a free trade agreement, granting 99 per cent of Indian exports (textiles to engineering goods) tariff concessions.

 

However, analysts noted limited immediate market reaction due to focus on earnings.  

 

"Initial optimism about the UK FTA briefly lifted pharma and textile stocks, but attention quickly shifted back to earnings," Bhat added.  

 

Vinod Nair, Head of Research at Geojit Financial Services, said, "Subdued Q1 performances dragged IT and FMCG stocks. While earnings are broadly in line, they don’t justify India’s premium 21 times price-to-earnings multiple. 

 

Foreign portfolio investors (FPIs) were net sellers of ₹2,134 crore, while domestic institutional investors (DIIs) provided support with net buying of ₹2,617 crore. Market breadth remained weak, with 2,517 declining stocks versus 1,542 gainers on the BSE.

 

Looking ahead, Siddhartha Khemka, Head of Research at Motilal Oswal Wealth Management, said: "We expect range-bound markets with stock-specific moves driven by Q1 earnings. Global cues, including UK FTA formalisation and India-US trade talks, will be closely monitored."

 

The Indian markets have underperformed emerging market peers, with the Nifty declining 1.8 per cent even as the MSCI EM ex-Japan gained 4 per cent.