India shares fall to two-week low on lower-than-expected Infosys forecast
MUMBAI (NewsRise) -- Indian shares fell to a more-than-two-week low on Thursday, dragged down by software stocks, as Infosys's annual revenue outlook disappointed investors.
The BSE Sensex index declined 0.6%, or 182.03 points, to 29,461.45 rupees, levels last seen on March 28. The broader NSE Nifty 50 index closed 0.6% lower, or 52.65 points, at 9,150.80. Infosys, India's second-largest software exporter, fell 3.9% to 931.40 rupees, its biggest single-day fall in about nine months. It also led a gauge of information technology stocks on the BSE down 2.7%.
"A weak start to the quarterly earnings season and disruptive global markets dragged the indices down," said Vinod Nair, head of research at Geojit Financial Services. "Going ahead, the performance of quarterly earnings will define the market trend."
Infosys said it expected revenue for the current fiscal year that started April 1 to grow 6.5% to 8.5% in constant currency terms. The forecast was lower than market expectations. The company also said it would return $2 billion to shareholders in the form of increased dividends, share buyback or both.
The software exporter's January-March net income grew marginally to 36.03 billion rupees ($559 million) from 35.97 billion rupees a year earlier, while revenue rose 3.4% to 171.20 billion rupees.
"The growth momentum is not very encouraging as year-on-year constant currency growth has been slowing down through the year," said Rumit Dugar, director at Religare Capital Markets. "This has clearly pushed up the asking quarterly rates it is reflecting clearly in their rather modest FY18 guidance."
Eighteen of the 30 Sensex constituents ended lower, while overall advancing issues edged past declining ones 1,459 to 1,441 and 148 stocks were unchanged.
Infosys's earnings weighed on shares of rivals. Tata Consultancy Services, India's biggest company by market value, declined 2.8% to 2,327.85 rupees, while Wipro ended down 1.2% at 495 rupees.
Among the few gainers, Reliance Industries, India's biggest private company by revenue, advanced 0.8% to 1,364.35 rupees to end a four-day losing streak.
Sun Pharmaceutical Industries rose 1.4% at 692.30 rupees, adding to the 1.8% gain in the previous session.
In coming weeks, earnings from frontline companies would be key for the market's direction as most analysts have expressed concerns that the earnings growth trajectory needs to reflect the current valuations.
Elsewhere in Asia, China's Shanghai Composite index rose 0.1% while Hong Kong's Hang Seng ended down 0.2%. Japan's Nikkei 225 index fell 0.7%, and South Korea's Kospi index gained 0.9%.
India's stock markets will be closed on Friday for a public holiday.
--Dhanya Ann Thoppil