Bloodbath for the Sensex and Nifty: Infosys drags benchmark indices, Nifty IT drops over 4%

After six days of advances, Indian equities benchmarks concluded the month of July with a steep loss as a few large companies delivered first-quarter profits that disappointed the market. Sentiment was also harmed by weak global signals and selling by local institutional investors.

The huge decline in Infosys shares dashed hopes that the NSE Nifty 50 would reach the 20,000 mark for the first time in its history. The BSE Sensex lost nearly 1,000 points to drop below the 67,000 barrier, driven by a 10% decline in Infosys stock, while the Nifty fell 1% below the 19,750 mark.

Closed at 66,684.26, the Sensex sank 887.64 points, or 1.31%, while the Nifty dropped 234.20 points, or 1.17%, to 19,745.

“The Indian IT sector’s outlook was clouded by Infosys’ poor projections, delaying Nifty’s quest of the 20,000-point level. Small caps showed resiliency as the heavyweights gave in to the bears, according to 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,” the economist said.

Infosys was able to meet market expectations in the April–June quarter with a 1% quarter–on–quarter rise in constant currency, but it was overshadowed by the reduction of the FY24 revenue growth projection from 4–7% to 1-3.5% year–on–year in constant currency.

The Nifty 50 gives Infosys a 5.9% weighting, and on Friday, it was the index’s largest loss.

The Nifty IT index decreased by more than 4%. Other significant IT equities, including Infosys, also saw significant losses. HCL Tech dropped 3.17 percent, Wipro 3.05 percent, TCS 2.58 percent, and Tech Mahindra 2.0 percent on the NSE.

Infosys, Tech Mahindra, HCL Tech, Hindustan Unilever, and Reliance Industries were among the Nifty’s worst losses.

“The decreased revenue growth projection of INFY for FY24 caused some pessimism in the counter, which fell over 9% in one day and lowered mood generally. As a result of the over 4% decline in the Nifty IT index, the Nifty50 had a significant correction during today’s trading session, according to Osho Krishan, Senior Analyst – Technical & Derivative Research, Angel One Ltd.

“The technical structure for the Nifty50 is still strong, although some cooling down was probably in store after the recent runup. We could anticipate a price-wise drop in the near future given the overbought situation in the markets. The undertone is extremely bullish, thus one should hold off on establishing short positions at this moment. The practical course of action would be to remove some funds from strong bullish wagers, the trader added.

Due to the bad performance of the oil and chemicals division, the market is anticipating lower results, which sent shares of Reliance Industries plummeting. The retail and communications industries, however, are anticipated to have strong development.

Following losses on Wall Street in the previous day, Asian shares declined as fears about a protracted high-interest rate environment in the United States and dismal results from Tesla and Netflix dampened investor mood.