Sensex flat, midcaps outperform; weak outlook drags Infosys

The 30-share BSE Sensex continued to trade marginally lower amid volatility, weighed down majorly by the Infosys (which has the third highest weightage on the Nifty 50 index following ITC and Reliance).

Software bellwether Infosys dropped over 4 percent (though trimmed down losses from 8 percent) following lower than expected guidance for current financial year 2012-13. Net profit and revenues in the second quarter, which were in-line with expectations, rose 3.5 percent and 2.5 percent quarter-on-quarter, respectively. But the company has cut the full year earnings per share forecast to at least Rs 160.61 from Rs 166.46 guided earlier and also revised dollar revenue guidance (in constant currency) downward to 5.7% from 6% earlier. Sanjeev Prasad of Kotak Institutional Equities was surprised by Infosys' reported Q2 performance. He says company's business is clearly under significant pressure. "We have maintained reduce rating on all frontline IT companies. We will be worried about other tier I IT companies post Infosys Q2." The BSE benchmark declined 21.38 points to 18,783.37 and the NSE benchmark was down 5.05 points to 5,703. TCS, country's largest software services exporter recouped early losses to trade 0.4 percent up while its rival Wipro was down 1.4 percent. Private sector lender HDFC Bank rose 1 percent while its rival State Bank of India gained 0.4 percent. FMCG majors ITC and Hindustan Unilever were up over 0.5 percent. Metals stocks like Tata Steel, Hindalco and Sterlite Industries rallied 1 percent. But the broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices gaining 0.7 percent each. About two shares advanced for every share declining on the National Stock Exchange. In the second line shares, DB Realty, United Bank, Prestige Estate, India Cements and Anant Raj Industries gained 4-5 percent while Tulip Telecom, Sun Pharma Advanced, Sobha Developer, AstraZeneca and Carborundum lost 2-5 percent. _PAGEBREAK_ At 9:20 hours IST: Nifty below 5700; Infosys sinks 7% on disappointing outlook Indian shares opened marginally lower on Friday following disappointing outlook for FY13 by the country's second largest software services exporter Infosys. The 30-share BSE Sensex fell 89.84 points to 18,714.91 and the 50-share NSE Nifty slipped 24.75 points to 5,683.30. Shares of software bellwether Infosys plunged nearly 8 percent after the company revised its full year guidance downward, though the second quarter numbers were in-line with expectations. Net profit rose by 3.5 percent quarter-on-quarter to Rs 2,369 crore and revenues went up by 2.52 percent to Rs 9,858 crore in the quarter ended September 2012. However, the company cut its earnings per share guidance for full year to Rs 160.61 a share from Rs 166.46 a share earlier and also reduced constant currency dollar revenues guidance to 5.7% versus 6%. CFO V Balakrishnan will give up its position with effect from October 31, but he will continue to be a board member. Rajiv Bansal, who is currently a VP - Finance, will become new CFO. Its rivals TCS and Wipro were down 0.7 percent and 1.5 percent, respectively. Engineering conglomerate Larsen & Toubro and commercial vehicle maker Tata Motors lost 0.6 percent each. Top lenders State Bank of India and ICICI Bank were marginally lower while their rival HDFC Bank rose 0.7 percent. FMCG majors ITC and Hindustan Unilever gained 0.7 percent each. Oil & gas producers Reliance Industries and ONGC were up 0.2-0.4 percent. Bajaj Hindusthan and Balrampur Chini were up 1 percent ahead of report from Rangarajan committee on sugar decontrol today. Advancing shares outnumbered declining by a ratio of 685 to 415 on the National Stock Exchange.