A weak earnings guidance from IT bellwether Infosys sent the market crashing down to sharply lower levels right at the stroke of the opening bell this morning. And the market, despite some selective buying in a few blue chips from oil, pharmaceuticals and realty sectors, stayed deep down in negative territory and ended the session with sharp losses on Thursday.
The industrial production data for May turned out to be somewhat decent, but not solid enough to lift sentiment any significantly. A sell-off in Asian and European markets amid disappointment at the U.S. Federal Reserve not giving any clues of more monetary easing, too contributed to an extent to the debacle on the Indian bourses.
Mirroring the sell-off in Infosys and sharp losses posted by some other IT stocks as well, the BSE IT index tumbled by over 5% on Thursday. The BSE Teck, which has several IT stocks in its fold, ended lower by 4.4%.
Consumer durables, capital goods, automobile and metal stocks too mostly ended weak. Bank and power stocks also closed on a negative note.
The BSE benchmark Sensex, which plunged to 17,181.17, ended the day with a loss of 256.59 points or 1.47% at 17,232.55. The Nifty index of the National Stock Exchange closed at 5235.25, slightly off the day's low of 5217.70, recording a loss of 71.05 points or 1.34%.
According to the data released by the government this morning, India's industrial production edged higher in May after contracting in the previous month, as output in Manufacturing and Mining sectors picked up pace while Electricity growth remained solid.
Industrial output grew by 2.4% in May 2012 as against a revised (-)0.9% reading in April 2012, the data showed. In May 2011, industrial production had expanded by 6.2%.
The cumulative growth rate in IIP for the period April-May 2012-13 stands at 0.8% over the corresponding period of the previous year.
The consumer goods sector output improved, while the consumer durables, non-durables and mining sectors saw a decline.
Infosys ended with a loss of over 8%. The company said this morning that its consolidated net profit as per International Financial Reporting Standards, declined 1.2% to Rs 2289 crore on 8.6% growth in revenue to Rs 9616 crore in Q1 June 2012 over Q4 March 2012.
In dollar terms, the company revised downwards both earnings and revenue growth guidance for the year ending March 2013, forecasting a 5% growth in revenue to at least $7.343 billion for FY 2013, lower than its April guidance of 8% to 10% growth.
Wipro lost nearly 4% and Tata Consultancy Services, finding some support ahead of announcement of quarterly results, restricted its loss to just around 1.8%. Several other IT stocks, including HCL Technologies (down 2.3%), closed with notable losses on Thursday.
The market breadth was weak. Out of 2917 stocks traded on BSE, 1631 stocks declined. 1174 stocks moved up and 112 stocks ended flat.