Sensex closes 257 pts down; Infosys tanks 8% on weak Q1 nos

The BSE Sensex fell as much as 308 points intraday on Thursday as sentiment was dented by Infosys' disappointing earnings for the June quarter and weak global cues. Even rumours of unlikely rate cut by the RBI added fuel to the fire.

The BSE benchmark slipped 256.59 points or 1.47% to close at 17,232.55 and the NSE benchmark dropped 71.05 points or 1.34% to 5,235.25 after hitting an intraday low of 5,217.70.

The BSE IT Index, which has major weightage (of more than 14%) after finance sector, tanked over 5% after software bellwether Infosys' results disappointed the street on every count. The stock fell more than 8% to Rs 2,260 as company's net profit dropped 1.16% quarter-on-quarter to Rs 2,289 crore whereas analysts on average had expected around Rs 2,448 crore.

Even the guidance for financial year 2012-13 was lowered by the company saying a large transformational project from a European utility company was cancelled in the quarter (worth approximately USD 15 million) which impacted the numbers and the guidance, according to Barclays Bank report.

Infosys expects a growth of at least 5% in revenues (in dollar terms) of USD 7.343 billion whereas analysts had expected around 6-8% and the company itself had forecasted 8-10% growth in April. Barclays Bank says, the lack of near-term visibility has caused the company to not give guidance for the September-12 quarter.

But its rival TCS, country's largest software services exporter, relatively outperformed Infosys with loss of just 1.8% ahead of its first quarter earnings today post market hours.

TCS has outperformed Infosys over the last few quarters and with Infosys failing to meet expectations yet again, the gap between the two could widen further. Analysts on average expect TCS' profit after tax to grow 11% quarter-on-quarter to Rs 3,250 crore while revenue is seen up by 12% to Rs 14,806 crore.

Among other technology companies, Wipro tanked 4% and Hexaware Tech lost 4.5%. HCL Tech declined 2.6% and Tech Mahindra was down 1%.

On the economic data front, industrial output data for May has improved to 2.4%, but the April output revised to negative 0.9% from 0.1% (provisional) earlier that also dampened the mood. Capital goods and mining sectors' growth was negative during the month while manufacturing, electricity and consumer goods reported lower growth as compared to a year ago period.

Now all eyes are on inflation (that will be announced on Monday); market experts expect around 7.5%. Aditi Nayar, Senior Economist, ICRA says, "Drawing upon the guidance provided recently by the RBI, inflationary concerns are likely to dominate monetary policy in the near term. With a low probability of any meaningful easing of retail or wholesale inflation in the forthcoming data for June 2012, the RBI may maintain policy rates at current levels in the first quarter policy review."

Country's largest private sector lenders ICICI Bank and HDFC Bank were down around 1% while State Bank of India ended flat.

Engineering and construction major by sales Larsen & Toubro lost 1.75% and cigarette major ITC declined 0.85%.

Top telecom operator Bharti Airtel slipped 3% and index heavyweight Reliance Industries was down 0.6%. Commercial vehicle manufacturer Tata Motors and top utility vehicle maker tanked 2% each whereas two-wheeler major Hero Motocorp moved up 0.88%.

However, PSU oil & gas companies outperformed - ONGC gained 1.4% and GAIL was up 0.6%. HPCL, IOC and BPCL rose 1-3% after sources from the oil ministry said diesel is likely to be hiked after Presidential polls, reports CNBC-TV18 quoting NewsWire18.

In the second line shares, Indiabulls Real, Shree Renuka Sugars, Bajaj Hindusthan, Karnataka Bank and Dhanlaxmi Bank were up 1-4%. Onmobile Global rallied 5%.

CMC rose more than 11% after stellar performance in first quarter numbers. However, IVRCL, HCC, NCC, Idea Cellular, Jain Irrigation and VST Industries were down 2-4%.

About two shares declined for every share advancing on the National Stock Exchange.

On the global front, France's CAC, Germany's DAX and Britain's FTSE went down 0.6-1%, taking their cue from poor overnight showings by Wall Street and Asia after minutes of the U.S. Federal Reserve's June meeting dampened hopes for more risk-asset-boosting stimulus in the near term. The Dow Jones futures too lost nearly 100 points. (With inputs from Reuters)