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Markets drop after Infosys result disappoints

Markets drop after Infosys result disappoints
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First Published: Thu, Jan 13 2011. 10 19 AM IST
Updated: Thu, Jan 13 2011. 10 19 AM IST
Mumbai: Shares skidded lower on Thursday as software services bellwether Infosys Technologies fell more than 4% after posting lower-than-expected quarterly earnings.
Investors were also wary ahead of weekly food and fuel price index due by noon and headline inflation on Friday, which should provide clues on how much the central bank would tighten policy on 25 January.
By 10:18am, the 30-share BSE index was trading down 0.47% at 19,441.35, with 16 of its components declining.
Infosys, a trendsetter for the country’s $60 billion outsourcing sector, said sluggish economic recovery in developed markets could hit the industry’s growth.
Its shares, which had climbed to a record high last week, were trading down 4% at Rs 3,240.
“The valuations and forex woes get me worried. They are the main issues around the IT sector,” Rakesh Rawal, head of private wealth management at Anand Rathi, said. “Going ahead, they will have to be proactive about dealing with currency risk,” he said.
Rawal said he does not hold IT stocks for his clients and is avoiding the sector for now.
Bangalore-based Infosys, which counts Goldman Sachs, BT Group and BP among its clients, said it expects dollar revenue to rise 25.7 to 26.1% in the year ending March versus an increase of 24 to 25% forecast in October.
Most analysts had expected Infosys to raise its dollar revenue growth outlook to 27 to 28%.
Bigger rival Tata Consultancy Services and No. 3 player Wipro however, recovered early losses and gained 0.6% each.
Metal producers gained on firm base metal prices. Non-ferrous metals producer Sterlite Industries and aluminium maker Hindalco were up 1% and 0.9% respectively.
The market breadth was positive helped by firm regional peers. In the broader market, gainers beat losers in a ratio of 1.2:1 on volume of 65 million shares.
Foreign fund have sold around $500 million of Indian equities since the new year began and the BSE index is down more than 5%. In 2010, the benchmark had risen 17.4% on back of record foreign inflows of $29.3 billion.
The 50-share NSE index was down 0.6% at 19,422.08.
The MSCI’s measure of Asian markets other than Japan rose 0.7% while Japan’s Nikkei was trading up 0.6%.
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Banks traded lower on interest rate rise worries. State Bank of India, ICICI Bank and HDFC Bank were down between 0.9% and 1.6%.
Oil explorer Cairn India was up 0.6% at Rs 343.75 on firm world crude oil prices.
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First Published: Thu, Jan 13 2011. 10 19 AM IST
More Topics: Markets | Stock market | Infosys | Infy | Net profit |