Indian equity benchmarks ended with sharp losses on 21 July after six days of gains as few big firms disappointed market sentiment with their first-quarter earnings. Weak global cues and selling from domestic institutional investors also hurt sentiment.
The NSE Nifty 50 was ready to hit the 20,000 milestone for the first time in its history, but the sharp plunge in Infosys shares shattered the dreams. Led by a 10 per cent plunge in the shares of Infosys, the BSE Sensex slipped over 1,000 points to fall below the 67,000 mark, while the Nifty tumbled 1 per cent below the 19,750-level.
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At close, the Sensex ended 887.64 points or 1.31 per cent down at 66,684.26, and the Nifty fell 234.20 points or 1.17 percent at 19,745.
"The weak guidance from Infosys cast a shadow over the outlook of the Indian IT sector, causing a delay in Nifty's pursuit of the 20,000 mark. While the heavyweights surrendered to the bears, the small caps demonstrated resilience," said Vinod Nair, Head of Research at Geojit Financial Services.
"Global markets presented a mixed picture, with the US market struggling due to weak earnings, while UK retail sales exceeded expectations with a 0.7% MoM growth," he added.
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Infosys managed to meet the market expectations with 1 per cent quarter-on-quarter growth in constant currency terms in the April-June quarter, but it was overlooked by the revision of FY24 revenue growth guidance from 4–7 per cent to 1–3.5 per cent year-on-year in constant currency.
Infosys has a 5.9 per cent weightage in the Nifty 50 and was the biggest loser on the index on Friday.
The Nifty IT index fell over 4 per cent. Apart from Infosys, other major IT stocks also witnessed sharp losses. On the NSE, HCL Tech fell 3.17 per cent, Wipro fell 3.05 per cent, TCS fell 2.58 per cent and Tech Mahindra fell 2 per cent.
The biggest losers on the Nifty included Infosys, Tech Mahindra, HCL Tech, Hindustan Unilever, and Reliance Industries.
"The revised revenue growth guidance of INFY for FY24 led to some pessimism in the counter which tanked nearly 9 percent in the day and dampened the overall sentiments. The Nifty IT index plunged nearly 4 percent, which is a major cause for the correction in Nifty50 in today’s trading session," said Osho Krishan, Senior Analyst - Technical & Derivative Research, Angel One Ltd.
"The technical structure remains buoyant for Nifty50 as some cool-off was likely on the cards post the recent runup. Considering the overbought scenario in markets, we may expect a price-wise correction anytime soon in the near period. However, since the undertone is strongly bullish, one may refrain from creating shorts at this point in time. The pragmatic approach would be to take some money off the table from aggressive bullish bets," he said.
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Shares of Reliance Industries tumbled as the market is expecting a softer set of numbers due to weak performance of the oil and chemicals segment. However, the retail and telecom business is expected to show healthy growth.
Asian equities fell, following weakness in Wall Street in the overnight session, as disappointing earnings from Tesla and Netflix and concerns of a prolonged high-interest rate regime in the United States weighed on market sentiment.
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