Infy sinks 9%, pulls sensex below 60k – Times of India

MUMBAI: The sensex fell nearly 1% to close below the 60,000 mark on Monday, snapping a nine-day winning streak.
Infosys, which declined by 9% to Rs 1,259, was the biggest drag on the index. Infosys sank 12% intraday, the most since March 2020, after the country’s 2nd largest IT company said that growth may fall to a six-year low in FY24 in the wake of slowdown in the US and Europe. A decline in HDFC twins and profit-booking were other contributors to the sensex’s 520-point loss.

The sensex plunged nearly 1,000 points intraday, but it recovered as wholesale inflation eased to a 29-month low of 1.3% in March.
According to analysts, IT companies are staring at macroeconomic headwinds and weak client spends in the short and medium term. However, long-term growth prospects are intact, they said. “Despite Q4 results being below expectations, potential growth drivers include cloud and digital transformations, as well as strong deal pipelines in certain areas. Consolidation of the IT sector in the last 15 months has moderated valuation risk. Long-term investors can consider accumulating IT stocks. Industry valuation has reduced to 5-year average, though volatility is expected in the short term,” said Vinod T P of Geojit Financial Services.
The Nifty IT index sank nearly 5% to a 6-month low as Infosys’s post-earnings commentary pointed towards sector-wide weak performance as US and European clients sought to defer discretionary spends. The top six IT companies by value lost nearly Rs 1 lakh crore in market cap on Monday.
After trading hours on Thursday (markets were shut on Friday), Infosys forecasted 4-7% revenue growth in FY24, which is less than half of the 15% it logged in FY23. Investors were rattled as the projected growth is slower than expected. Another reason why the sentiment soured across the sector was that Infosys was the first major Indian IT company to provide revenue guidance for the current financial year. TCS, which also reported weak numbers on Wednesday, had not provided an estimate for FY24 growth.
According to Edelweiss MF chief investment officer (equities) Trideep Bhattacharya, the IT sector is witnessing recalibration of FY24 earnings estimates in tune with latest global demand scenario. “The recent results are a step in the same direction leading to consensus earnings downgrades of 4-8%,” he said.
Analysts also noted that negative sentiments were limited to large-cap stocks on Monday. “Broader market outperformed with Nifty Midcap 100 and Smallcap 100 both gaining marginally. PSU bank index was up 3% after some of the banks hiked MCLR,” Siddhartha Khemka of Motilal Oswal Financial Services said. BSE market cap increased marginally by Rs 3,300 crore to Rs 269.4 lakh crore on Monday.