Sensex ends 138 points down on weak guidance from Infosys

Information technology stocks tumbled after sector bellwether Infosys came out with a somewhat disappointing earnings forecast for the March quarter even as its net profit for the October - December 2011 saw a better than expected surge thanks to a weak rupee. And, losses posted by them were so sharp that a good show by key stocks from metal, banking, automobile and power sectors failed to pull the market out of negative territory till the very end.

With concerns about eurozone debt too weighing to a notable extent, investors ignored even a fairly encouraging report on industrial production for the month of November 2011, and falling food inflation.

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The Sensex, which declined to 15,962.59, ended the session with a loss of 138.35 points or 0.86% at 16,037.51, while the Nifty closed lower by 29.70 points or 0.61% at 4831.25, off the day's low of 4803.90.

According to the data released by the government around noon, food inflation for the week ended December 31 was at -2.9%, as compared to - 3.36% a week ago. Primary Articles Index edged higher to 0.51% from 0.1% a week ago.

Earlier in the day, the government said India's industrial production bounced back sharply in November, beating estimates. The factory output grew by 5.9% in November versus a 5.1% contraction in the previous month, data released by the Commerce Ministry showed.

The Government revised October's industrial production growth, from a preliminary figure of -5.1%, to -4.7%. Industrial output in the April to November 2011-12 period grew by 3.8% compared to the expansion of 8.4% in the corresponding period a year earlier.

While the manufacturing sector growth surged 6.6% in November, compared to a growth of 6.5% in the same month of 2010, power generation grew by robust 14.6% in November, 2011, compared to 4.6% in the same month last year. Consumer durables and consumer non-durables sectors too saw a strong growth, while growth in mining and capital goods sectors declined significantly.

Infosys ended 8.4% down at Rs 2588.60, contributing substantially to the market's weak close. The IT major announced that its net profit rose to Rs 2372 crore for the quarter ended December 31, 2011 as compared to Rs 1780 crore for the quarter ended December 31, 2010. Total income increased from Rs 7396 crore for the quarter ended December 31, 2010 to Rs 9720 million for the quarter ended December 31, 2011. On a sequential basis, the company's net profit surged by about 24.5%.

Infosys projected a flat to 0.22% growth in consolidated revenue in dollar terms at $1.806 billion to $1.81 billion in Q4 March 2012 over Q3 December 2011.

Tata Consultancy Services lost 3.8% as it settled at Rs 1092.90 and Wipro, the other IT major in the Sensex, closed with a loss of 2.6% at Rs 391.

Among other IT stocks, Tech Mahindra, HCL Technlogies, Educomp Solutions, Polaris and MindTree also ended on a weak note. CMC, Mphasis, Hexaware, HCL Infosys bucked the trend and ended notably higher.

Reliance Industries (down 1.4%), Larsen & Toubro (down 1.25%), BHEL (down 0.8%) and ONGC (down 0.55%) also ended notably lower. Sun Pharmaceuticals, Cipla and Jindal Steel closed with marginal losses.

State Bank of India moved up by over 2%. Hindalco, Tata Power, Coal India, Tata Steel, Bajaj Auto, GAIL India, Sterlite Industries and NTPC gained 1% - 2%. HDFC Bank, Tata Motors, ITC and Maruti Suzuki also ended notably higher.

Housing finance major HDFC ended nearly a percent up. The company posted a net profit of Rs 981.25 crore for the quarter ended December 31, 2011, up 10% from a net profit of Rs 890.88 crore it had posted in the quarter ended December 31, 2010. Total income increased from Rs 3321.04 crore for the quarter ended December 31, 2010 to Rs 4472.51 crore for the quarter ended December 31, 2011.

United Breweries shot up by nearly 13%. United Spirits gained about 6.5%. Shree Renuka Sugars and Manappuram Finance gained more than 7%. Sun TV Network, ABB, GMR Infrastructure, Lanco Infratech, Havells India, Crompton Greaves, Adani Power, Sesa Goa, Motherson Sumi, IndusInd Bank, CESC, Bajaj Finserv, IDFC, Cummins India and Indian Overseas Bank were among the other strong gainers.

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TTK Prestige ended lower by over 7.5% despite a modest surge in earnings. Coromandel International, Biocon, Bata India, Mundra Port, Alstom Projects, Indiabulls Financial Services, Nestle India, Aurobindo Pharma, Rashtriya Chemicals & Fertilizers and Colgate Palmolive also declined sharply.

The market breadth was slightly positive. Out of 2875 stocks traded on BSE, 1422 stocks moved up. 1310 stocks declined and 143 stocks ended flat.