Infosys share fall contributes 500 pts to Sensex 1,000-point selloff; other reasons behind the market decline

While the market consolidation was on the cards, given the key indices were up for nine straight days, a selloff in Infosys, an index heavyweight, dragged benchmark indices quite a bit in Monday's trade. The BSE Sensex lost as much as 989 points in early trade. It last traded at 59,787.60, still down 643.40 points or 1.06 per cent. Nifty hit a sub-17,600 level and later traded 17,663.75, down 164.25 points or 0.92 per cent.

The BSE market capitalisation fell to Rs 2,64,60,214 crore from Rs 2,65,93,889 crore on Thursday, with every six stocks slipping for every five that rose during the intraday deals. Here're the factors dragging the market lower.

Infosys drags IT pack lower

Infosys alone contributed over 500 points to the Sensex fall. Shares of TCS (70 points), HCL Technologies (32 points), Tech Mahindra (32 points) and Wipro (12 points) also contributed negatively to the index. Shares of Infosys fell 12 per cent and was the worst hit Sensex stock. Tech Mahindra (down 5 per cent), HCL Technologies (down 3 per cent), Wipro (down 2.6 per cent) and TCS (down 2.35 per cent) were other key losers in the 30-pack index.

Nuvama said Q4 results were disappointing and sees the lower FY24 guidance as a manifestation of the overall weak macros, which might keep Infosys – and other IT stocks – under pressure in the near term.

Agrressive Fed, firm dollar

Expectations of an additional 25-basis point (bps) hike at the Federal Reserve's May 2-3 meeting rose to 81 per cent, futures showed, with markets now seeing less than 60 bps worth of rate cuts in the second half of the year, a Reuters report suggested. Fears of rate hike intensified as dollar bounced from a one-year low on Monday following a strong core US retail sales data, an expectation of a rise in short-term inflation expectations and impressive Wall Street bank earnings.

HDFC Bank results

HDFC Bank's Q3 results were were in-line with Street estimates, with a 20 per cent rise in profit after tax and stable net interest margin (NIM) at 4.1 per cent, but the core pre-provision operating profit (PPoP) moderated a bit, weighing on bank stocks. HDFC Bank stock was down nearly two per cent while two other private banking stocks namely Axis Bank and ICICI Bank were also trading in the red.

Rupee falls against dollar

The rupee depreciated 12 paise to 81.97 against the dollar in Monday's trade, weighed down by firm crude oil prices and a negative trend in domestic equities. Forex traders said the strengthening of the American currency in the overseas market also weighed on the local unit. A drop in rupee negatively impacts foreign inflows to equity. Data showed FPIs have infused Rs 8,767 crore into domestic equities in April so far, but are net sellers to the tune of Rs 17,443 crore in 2023 so far.

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