Markets may extend losses in the last leg of trade after Infosys third quarter results dissapointed the street and pulled a plug on Wednesday's rally. IT and bankex shares were dragging the markets down.
Markets opened in red after Infosys reported a 14.3% rise in net profit for Q3, below market expectations as rising Rupee weighed. The Nifty opened at 5,850 and skidded to a low of 5,744 led by heavy losses in frontline IT and banking shares. Currently the Nifty was trading near day's low at 5,761, down 103 points and the Sensex was at 19,211, down 330 points.
Markets were unable to hold on to Wednesday's pull back, with upside on the Nifty capped around 6000. Gaurang Shah, AVP, Geojit BNP Paribas Financial Services said, "from purely short-term point of view, investors should take the money off the table closer to 5940-6000 levels for the Nifty and anything below 5700 will be an opportunity to buy."
Infosys results dampened market sentiment as the IT bellwether gave a muted guidance for sequential growth. The stock was beaten badly and dipped to a low of Rs 3222. Currently the stock was trading at 3,230, down 4.3%. Infosys management CEO and MD, S Gopalakrishnan also indicated cautious outlook emphasizing on the risks from weaker economic recovery and sovereign default on demand.
Also, Gaurang Shah reckoned, "rising wages is a concern and has direct impact on Infosys bottomline. Furthermore, slow recovery in the global market and unemployment rate could hamper the outlook going forward, but it is short-term negative." Geojit BNP Paribas Financial Services recommended a buy on Infosys close to around Rs 3,200-3,240 with price target of Rs 3,540 in 12 months. Rival IT players were also trading in the red, Wipro was down 1.1%, HCL Technologies fell 1% and TCS was trading flat.
Food inflation eased marginally but continued to remain in double digits, at 16.9% for the week ended Jan 1, and fuel price index climbed to 11.53%, putting pressure on the government to raise rates.
Bankex continued to play a spoilsport, the BSE Bankex index was down 3.2%. ICICI Bank dropped 4.4%, Indusind Bank declined 4.2%, State Bank of India fell 3.6% and Axis Bank was down 3%.
Infosys was the top Sensex loser, down 4.8%, HDFC Bank plunged 2.8%, Jindal Steel was off 1.8% and Mahindra & Mahindra, down 1.7%, were top losers on the Sensex.
Only 3 components on the Sensex were trading in the green, ONGC, up 0.8%, Tata Motors, up 0.7% and DLF, up 0.2%.
Broader markets were also trading in the red, the midcap and largecap shares were down 1% and 0.7% each.
