Sensex sheds 175pts, IT stocks tumble

The markets have opened with a significant negative gap this morning on the back of weak overseas cues and heavy selling in IT stocks. The Sensex opened at 18,534, and soon touched a low of 18,460 - down 261 points from the previous close. The Sensex is now down 175 points at 18,546. The NSE Nifty has declined 49 points at 5,567.

The BSE IT index has plunged almost 4% at 5,861 on the back of a sharp fall in Infosys. The IT major today reported 5.5% drop in sequential net profit at Rs 1,722 crore for the quarter ended June 30, 2011. However, revenue grew marginally by 3.2% to Rs 7,485 crore.

Infosys has now plunged over 5% to Rs 2,763. The counter has seen trades of around 164,000 shares so far on the BSE. TCS and Wipro are the other major losers, down around 2.5% each. HCL Tech, MphasiS and Tech Mahindra too are languishing in the negative territory.

Global markets too were trading with significant losses on reports that the sovereign-debt crisis may spread to Italy and Spain. Concerns that next wave of European Sovereign debt contagion may hit Italy and Spain caused risk aversion, for equities. Markets across the world made over a 1% cut in the indices.

In US, the S&P 500 and Nasdaq dropped around 2% each, while Dow declined over 1%.

Meanwhile, Most of the Asian markets are down around 2% each. Hang Seng, Taiwan and Seoul Composite indexes were down around 2% each. Nikkei and Shanghai too were down over 1% each.

Back home, apart from the IT majors - Maruti and Hindalco are the other major losers, down nearly 2% each. Jindal Steel, DLF, Jaiprakash Associates, Tata Motors and SBI are down over 1% each.

Defensive bets like ITC and Hindustan Unilever, however, have bucked the trend, and trade with marginal gains. Reliance too is trading on a flat note.

The market breadth is fairly negative - out of 1,538 stocks traded so far, 1,011 have declined and 477 have advanced on the BSE.

Late today, market participants would be awaiting the June Industrial Output. Poll conducted by Reuters expects the IIP at 8.2%.