Infosys earnings, weak macro data hit market sentiment: Sensex falls 182 pts

Infosys’ lower-than-expected earnings & guidance and contraction in factory data & higher retail inflation weighed market sentiments on Thursday as the BSE Sensex fell more than 200 points intraday.

The 30-share BSE Sensex was down 182.03 points at 29,461.45 and the 50-share NSE Nifty slipped 52.65 points to 9,150.80, dragged by technology, metals, infrastructure and auto stocks. However, buying in Reliance Industries and banking & financials arrested fall.

After a weak start to earnings season by Infosys, investors will cautiously look at March quarter numbers going ahead, experts say, adding macro data also raised concerns over fourth quarter factory data.

“Though we have reached closer to the immediate support of 9100 mark in Nifty but erratic swings on stock specific front demands extra caution,” Jayant Manglik of Religare Securities says.

He advises traders to keep their leveraged positions hedged and avoid IT, pharma and metal for long trades.

Also, keep a close eye on earnings and global developments for further cues, he says.

The market closed the truncated week on a negative note as the Sensex was down 0.8 percent and the Nifty fell 0.5 percent while the Nifty Midcap index outperformed benchmarks, up 0.8 percent.

The equity markets will remain shut on Friday for Dr Baba Saheb Ambedkar Jayanti and Good Friday holiday.

Infosys stock price plunged nearly 4 percent after lower-than-expected earnings in Q4. The IT major expects 6.5-8.5 percent growth in FY18 dollar revenue in constant currency, which too missed analysts’ expectations of 7-9 percent.

CEO Vishal Sikka said unanticipated execution challenges and distractions in a seasonally soft quarter affected overall performance. However, the only positive factor was its change in capital allocation policy as it has identified an amount of upto Rs 13,000 crore to be paid out to shareholders during financial year 2018, by way of dividend and/or share buyback.

Infosys earnings dragged the Nifty IT index 2.5 percent and raised doubts over other IT companies’ earnings. TCS was down 2.77 percent and Wipro fell 1.2 percent.

Meanwhile, macro data announced yesterday evening also hit market sentiment. Retail inflation in March rose to a 5-month high of 3.81 percent against 3.65 percent in previous month due to costlier protein items, edible oils and non-food products. Industrial production contracted by 1.2 percent in February against 3.3 percent growth in January, hit by manufacturing sector.

Metals lost shine today, with the Nifty Metal index falling nearly 3 percent as Hindalco and Vedanta tanked 5 percent each while Tata Steel was down 3 percent.

Reliance Communications slipped nearly 3 percent as Deutsche Bank downgraded the stock to sell and slashed target price to Rs 30 from Rs 57 earlier. The company could lose around 100-150 bps revenue share over the next two years, it feels.

Macquarie has downgraded Adani Ports to neutral, with a target price at Rs 347, saying there are also possible headwinds to business related to iron ore volumes. It recommends waiting on sidelines & evaluate next steps by promoters. The stock was down over 2 percent.

Among others, Tata Motors, L&T, Bharti Airtel and Maruti Suzuki slipped 1-3 percent whereas Sun Pharma was biggest gainer among Sensex stocks again, up 1.4 percent followed by Reliance Industries, HDFC, ICICI Bank and SBI.

The broader markets outperformed benchmarks, with the BSE Midcap index up 0.3 percent and Smallcap rising 0.2 percent despite balanced market breadth.

On the global front, European markets were half a percent lower as investors digested US President Donald Trump’s comments. Asian markets ended mixed.