Indian benchmark indices opened on a muted note on Friday but extended weakness as the session progressed, following a mixed performance from index heavyweights including Reliance Industries Ltd, Infosys and Axis Bank, where the oil-to-telecom-to-retail major met the street's expectations, while Axis Bank Ltd disappointed the street. Infosys reported a neutral set of earnings on Thursday.
BSE's barometer Sensex settled 26.27 points, or 0.03 per cent, higher at 77,069.19 in the pre-opening window on Friday. Similarly, NSE's Nifty50 index settled at 23277.10, falling 34.70 points, or 0.15 per cent in the early trade. However, benchmark indices extended their losses more than half a per cent after the opening bell.
Reliance Industries contributed to 265 points gains for the Sensex gains, while Axis Bank and Infosys contributed 144 points and 238 points in the fall in the pre-open window. Their contribution in the Sensex's 450 points increased as other IT and banking majors including TCS, ICICI Bank, HDFC Bank and HCL Tech contributed more than 150 points in the fall.
Leading the pack of losses on the index, Infosys Ltd tumbled 4.9 per cent to Rs 1,832 on Friday, with a total market capitalization slipping below Rs 7.6 lakh crore. The IT major's net profit increased 4.6 per cent YoY to Rs 6,806 crore, while revenue rose 1.9 per cent YoY to Rs 41,764 crore for the December 2024 quarter. However, the sale of third party items soured the mood of the market.
Motilal Oswal marginally tweaked its estimates for FY25/FY26/FY27E, reflecting the anticipated QoQ revenue decline in 4Q needed to meet the upper end of guidance, alongside the cautious commentary. It has a buy rating on the stock with a target price of Rs 2,200. Kotak Institutional Equities has a 'buy' rating on Infosys with a target price of Rs 2,250.
Axis Bank was another stock which dropped more than 4 per cent in the opening tick. It breached Rs 1,000-mark to slip to Rs 997.75 for the day, but managed to hold a market capitalization of 3 lakh crore. India's third largest private lender was hurt by the rise in the NPA. However, its net profit rose 4 per cent YoY to Rs 6,304 crore, while net interest income increased 9 per cent YoY to Rs 13,606 crore in the third quarter of the current financial year.
Mirae Asset Sharekhan said that Q3FY25 numbers were weak. Loan growth and deposit growth stood at a multi-quarter low. Slippages were elevated, largely attributed to credit cards, personal loans, MFI and Agri-portfolio, it said with a 'buy' rating with a target price of Rs 1,230. Motilal Oswal has a 'neutral' rating on Axis Bank with a target price of Rs 1,175.
LTI Mindtree Ltd was another largecap IT stock which tumbled more than 3.3 per cent to Rs 5,780.30 on Friday, with its total valuations falling below Rs 1.7 lakh crore mark. The IT solutions player reported a 13.2 per cent YoY fall in its net profit at Rs 1,086.7 crore but revenues increased 2.4 per cent YoY to Rs 9,660.9 crore in the December 2024 quarter, with a marginal contraction in the margins. Nuvama Institutional Equities said that LTIMindtree posted decent Q3FY25 results. LTIM appears to have recovered completely from the Q3/Q4 debacle last year. While visibility on growth remains good, margin expansion continues to be delayed, it said with a 'buy' rating on the stock with trimmed target price of Rs 7,000. HDFC Securities has maintained its 'add' rating on the stock with a target price of Rs 6,300.
On the other hand, Reliance Industries (RIL) was the sole heavyweight trying to defy the weakness, rising about 4.45 per cent during the session to hit Rs 1,325.10 mark. The total mcap of the company inched closer to Rs 18 lakh crore during the day.
RIL clocked a 7.4 per cent YoY rise in its net profit to Rs 18,540 crore in the December 2024 quarter, while the consolidated revenue for the oil-to-telecom major grew 6.97 per cent YoY to Rs 2,43,865 crore. Ebitda for the quarter rose 7.8 per cent YoY to Rs 48,003 crore, while margins expanded 10 bps.
RIL 3QFY25 consolidated Ebitda was 3 per cent ahead of estimates, said Kotak. The key positive was the improvement in the retail business, while O2C and E&P were also 5-7 per cent ahead of estimates. However, the impact was offset in part by a weak telecom segment, it said with an 'add' rating with a target price of Rs 1,435. Nuvama has a 'buy' rating on RIL with a target price of Rs 1,673.