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The benchmark BSE Sensex ended down by over 170 points after surging over 225 points in early trade following a downward revision in Infosys dollar revenue forecast for the ongoing fiscal, which triggered a massive sell-off in the IT and TECk stocks.
IT bellwether Infosys’ shares erasing all its early gains ended 3.88 per cent down after it cut its dollar revenue guidance for the financial year 2016 despite posting 9.8 per cent rise in net profit to Rs 3,398 crore for the second quarter.
Consequently, IT index plunged 2.02 per cent, while TECk took a hit of nearly 1.85 per cent.
Moreover, caution ahead of the key macroeconomic data, IIP and inflation, to be released later in the day too influenced the market sentiment.
The 30-share Sensex, after remaining in green zone briefly by surging 225 points at the outset, slipped into the negative zone soon after Infosys announced results and dipped below the 27,000-mark to touch a low of 26,855.75.
The index finally settled 175.40 points down or 0.65 per cent at 26,904.11.
Simlarly, the 50-share NSE index Nifty also ended 46.10 points or 0.56 per cent down at 8,143.60 after shuttling between 8,244.50 and 8,128.20.
IT and TECk stocks succumbed to heavy selling pressure as Infosys has cut its fiscal year 2016 revenue forecast as broad weakness in IT spending and a stronger dollar are making clients wary.
IT index was down 2.08 per cent, followed by TECk 1.87 per cent, healthcare 0.96 per cent and FMCG 0.77 per cent. On the other hand, metal index was up 1.38 per cent, followed by power 0.95 per cent, infrastructure 0.42 per cent and capital goods 0.36 per cent.
Top five Sensex gainers were VEDL (+7%), Hindalco (+5.98%), GAIL (+2.49%), Tata Motors (+1.83%) and BHEL (+1.76%), while the major losers were Infosys (-3.88%), Lupin (-2.16%), Cipla (-1.71%), Sun Pharma (-1.58%) and HDFC (-1.44%).
"There has been Infosys-led falls but Infosys earnings cannot be extrapolated to the entire earnings season," said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance Co.
Sageraj Bariya of East India Securities said in a report: "The naysayers of China slowdown must have noticed how 50 lane highways in China was clogged with massive traffic jams post the Golden Week national holiday. Consumer spending surged in the Golden Week national holiday indicating that robust household spending could buffer the slowing economy. Bounce back in commodity prices and stocks have been nothing short of spectacular - Glencore up 85% from the low, Vedanta PLC up 45%. Also the zinc production cut announced by Glencore is an indication that commodity prices have probably hit a floor. This should further boost the sentiment for emerging market assets. Asian markets are up to a strong start led by up move in Chinese equities. We remain positive on Indian markets and every weakness should be bought into."
Global markets
A surge in the shares of German utility stocks propped up European equities on Monday, enabling the region’s stock markets to remain near one-month highs.
Germany’s DAX outperformed to rise 0.7 per’cent, with utilities RWE and E.ON surging by 13 per cent and 10 per cent, respectively.
The DAX outperformed a flat pan-European FTSEurofirst 300 index and the euro zone’s blue-chip Euro STOXX 50 index, with the FTSEurofirst remaining near a one-month high reached on Friday.
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