The Hindu Business Line : Infosys rattles market

A WEAKER-THAN-EXPECTED performance by technology leader Infosys, coupled with gloomier profit guidance for the year ahead, knocked the wind out of stock markets on Thursday.

The "shocking" news dragged an already-depressed 30-share sensitive index of the Bombay Stock Exchange 105.92 points or 3.37 per cent lower to close the day at 3035.33.

The S&P CNX Nifty of the National Stock Exchange plunged below the psychological 1,000-point level and strong resistance at 970 to close at 962.20 or 4.24 per cent lower than its previous close of 1,004.85.

The BSE TecK index lost almost 18 per cent or 141.07 points to end the day at 643.89.

"Aaj to rone ko aansoo tak nahin chode (today we did not even have tears to weep)," a dealer with a domestic brokerage house said about the day's carnage.

He added that the markets were unlikely to recover for a few more days.

According to him, Infosys's profit guidance of about 12.5 per cent year-on-year fell short of market expectations of 18 per cent.

The dominoes started tumbling when the country's most reputed and largest listed software exporter reported a fourth quarter net profit of Rs 259 crore, sharply lower than Rs 275-280 crore expected by market analysts.

The stock lost Rs 1,113.45 or 27 per cent, its steepest fall in recent times, to close at Rs 3,044.60 on the BSE.

According to a dealer, today's weakness was the most acute seen in recent times.

"Nobody had expected such a news from Infosys. We had met company officials a few weeks ago and they had denied that there was any pressure on pricing," he said.

Another software solutions provider, Mastek Ltd, led the losers' list with a 50 per cent value erosion after the company lowered its profit forecast. It ended the day at Rs 284.70.

The other major losers on the BSE were HCL Technologies, which lost 16 per cent or Rs 26.55 to close at Rs 139.80, and Satyam Computers, which fell 15.5 per cent to Rs 150.70 from its previous close of Rs 178.25.

Zee Telefilms also slid six per cent to Rs 66.35 from its previous close of Rs 70.60.

Mr Gul Teckchandani, Chief Investment Officer of Sun F&C Mutual Fund, said: "The market today was more sentiment-driven than performance.

"Even though such sentiment bursts are difficult to predict, it could well be an opportunity for bottom fishers to enter."

On the NSE, Wipro fell 17 per cent from yesterday's close of Rs 1,232.40 to end at Rs 1,022 and Digital Global lost Rs 100.20 or 17 per cent to close at Rs 496.

Mr Teckchandani said that while some stocks may have been caught in the sentiment, some others might have been due for a correction.

Some manufacturing sector and pharmaceutical stocks were standing up amid the ruins.

Two-wheeler maker Hero Honda, the top gainer of the day, went up about five per cent from its previous close of Rs 184.30 to Rs 193 following the announcement of 900 per cent dividend.

State Bank of India gained Rs 6.80 on speculation that foreign investors may be allowed a larger pie in the country's top commercial bank.

It closed at Rs 290.90, or 2.39 per cent higher than the previous close of Rs 284.10.

Among pharma stocks, Ranbaxy gained 2.81 per cent to close at Rs 683.90.

Cipla closed 2.35 per cent higher at Rs 743.65 and Dr Reddy's ended the day at Rs 931.55 with a gain of Rs 6.65.

ADRs also take a beating: The subdued forecast from Infosys percolated to Indian companies' shares listed elsewhere too.

Infy ADRs were trading 28 per cent lower at $42.77 on the Nasdaq at around 9 p.m.

On the New York Stock Exchange, Wipro lost nearly 21 per cent in early trade and was trading at $21.95.

Satyam was trading at $7.26, down 17 per cent.

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