Infosys plunges 8.5% on guidance, Sensex, Nifty down
Investors paid little attention to the sharp rebound in industrial output. Most IT stocks came under selling pressure.
Markets ended lower Thursday after IT major Infosys lowered its fourth quarter dollar revenue guidance, fearing a slowdown in US and Europe - the biggest market for Indian IT firms. The Sensex ended 138.35 points or 0.86 per cent lower at 16,037 while the broader Nifty index declined 29.70 points to 4,831.
"They have reduced the guidance again indicating macro challenges and this shows that Infosys is not immune to it," IT analyst Trip Chaudhuri said. Infosys plunged nearly 8.5 per cent on the Bombay Stock Exchange (BSE) and cost the Sensex 140 index points.
Analysts were also unhappy by the marginal hike in rupee guidance despite 10 per cent depreciation in the rupee. However, most agreed that the selling was over-done.
"Markets have over-reacted to the scale down on the dollar revenue guidance for Q4... The management is only trying to tone down expectations for FY13. In general, the numbers have been very good. We believe the stock is giving up some of the outperformance it has given in the last few months," Nilesh Shah, MD & CEO of Envision Capital said.
Infosys guidance dampened sentiments across IT stocks. The BSE IT index tanked nearly 6 per cent. TCS declined nearly 4 per cent while Wipro ended with over 2.5 per cent losses.
Investors paid little attention to the sharp rebound in industrial output, which bounced back into the green in November. Analysts said the markets will increasingly move on macro-data because a slowdown in earnings was already factored in.
"The Street has already factored in the earnings de-growth and macro data will decide the market direction. The Nifty is likely to remain range bound (4,600-5,100) for the next few weeks. The bias will be at the higher end of the range," Shah added.
Most other sectoral indices ended with gains. Banking, metal and power stocks advanced over 1 per cent.
In corporate news, HDFC reported in-lines Q3, with profits rising 10 per cent to Rs 981 crore. The stock gained nearly 1 per cent on the BSE.
36 stocks ended higher on the Nifty index. Sesa Goa saw big gains for a second straight day and advanced over 5 per cent. IDFC and Jaiprakash Associates rose 3-4 per cent. The market breadth was positive with 66 per cent stocks rising on the broader BSE 500 index.