Disappointing second quarter profits and lower sales guidance by Infosys on Friday pulled down the Sensex by 130 points, amid a revival in industrial growth and easing inflation that dimmed rate cut hopes.
The BSE benchmark index opened nearly 78 points lower, dragged down by Infosys scrip which tanked nearly 8% after the IT major unveiled the second quarter numbers.
The Sensex ended lower by 129.57 points, or 0.69% at 18,675.18. Likewise, Nifty fell by 32 points to 5,676.05.
Brokers said market sentiment was hit due to a cut in Infosys' September quarter profit and full-year sales outlook.
Infosys posted 24.3% jump in consolidated net profit at Rs. 2,369 crore, while its revenues were up 21.7% at Rs. 9,858 crore.
The IT major also lowered its revenue growth guidance for the current financial year to 17.3 per cent from the earlier target of 19.7%.
Infosys scrips pared some losses to close 5.36% lower at Rs. 2,395.65.
"It was a down day for markets...for fourth quarter in a row, Infosys' stock crashed post results. Infosys guided about challenging times and trimmed down its FY13 guidance," said Nagji K Rita, CMD, Inventure Growth & Securities.
In 30-share Sensex, 16 stocks declined while 14 scrips including GAIL, Tata Power and Hindalco ended higher.
Meanwhile, industrial production grew by 2.7% in August, reversing the contraction trend witnessed during the previous two months.
This data coupled with September consumer inflation at 9.73%, marginally down from the previous month, also dimmed rate cut hopes. Interest-sensitive sectors like realty and auto shares shed value as investors reduced positions.
"After a long time, India's growth and inflation data are moving in the right direction...the upcoming WPI inflation (on Monday) will be the most important data before the RBI policy meeting on October 30," said Nomura Economist Sonal Varma.
Meanwhile, HDFC Bank shares gained over 1% on the lender posting 30 per cent rise in quarterly profit.
Globally, Asian stocks ended narrowly mixed today. Key indices from China, Hong Kong, Singapore and South Korea closed better while from Japan and Taiwan settled lower.
European markets were also lower in the afternoon deals. The CAC was down by 0.43 per cent, the DAX by 0.45 per cent and the FTSE by 0.31 per cent.
Speaking on Indian markets, Kishor P Ostwal, CMD, CNI Research Ltd said: "Market corrected today on weak Infosys guidance. Strong IIP data were used for profit booking. RIL's earnings need to be watched on Monday."
Besides Infosys, losers from the Sensex pack were Bharti Airtel (2.58%), BHEL (2.46%), Wipro (2.01%), Hero MotoCorp (1.61%), ICICI Bank (1.22%), Tata Motors (1.19%), ONGC (1%), Sun Pharma (1%) and Dr Reddy (0.99%).
However, GAIL shot up by 1.16%, followed by Cipla (1.01%), HDFC Bank (0.94%), TCS (0.66%) and HUL (0.6%).
"Indian stocks have been swinging back and forth lately after the NSE Nifty crossed 5700, which was driven by a slew of economic reforms and strong FII inflows. But, after a stupendous run of gains, participants seem to be taking a breather of sorts to examine the latest quarterly results," said Amar Ambani, head of research, IIFL.
Among sectoral indices today, the BSE-Teck dropped by 2.26 per cent, followed by the BSE-Realty (0.88%), the BSE-Auto (0.73%), the BSE-CG (0.43%), the BSE-PSU (0.42%) and the BSE-Bankex (0.40%).
The market breadth was negative as 1,517 stocks ended with losses while 1,369 stocks finished with losses.
The total turnover firmed up further to Rs. 2,742.56 crore from Rs. 2,479.38 crore on Thursday.
Meanwhile, Foreign Institutional Investors (FIIs) bought shares worth a net Rs. 1,043.01 crore yesterday, as per provisional data from the stock exchanges.