Market closing: Sensex dips 889 points, Nifty erases 234 points as sharp selling in IT stocks take toll

Markets bled on Friday as Sensex dropped by more than 1.3% and Nifty 50 was pulled back further away from its pivotal psychological mark of 20,000. A broad-based selling was seen across sectoral indices with a major hammering of IT stocks after Infosys announced weak FY24 guidance, had taken a heavy toll on investors sentiment. Also, a sharp decline in large-caps like RIL and HUL along with mixed global cues further dragged the performance. Nevertheless, the benchmarks settled the overall week with an upside of nearly 1%.

Sensex ended at 66,684.26, down by 887.64 points or 1.31%, while Nifty 50 dipped by 234.15 points or 1.17% to finish at 19,745. India's volatility index declined by a little over 2.5%.

Infosys emerged as the top bear on both Sensex and Nifty 50 by falling around 8% each after its Q1 results and sharper-than-expected cut in FY24 guidance. Due to this, broadly, the Nifty IT index dived by 4.09% to end at 29,871.05, and the BSE IT index shed 1,385 points or 4.40% to finish at 31,483.86. Other tech giants like HCL Tech, Wipro, and TCS were among the top underperforming stocks on the mainboard with a drop of 2.5% to 3.5%.

Other heavyweights like Reliance Industries (RIL) and Hindustan Unilever (HUL) also dipped by 2.6% and 3.7% respectively with focus surrounding their Q1 earnings. Tech Mahindra, JSW Steel, M&M, IndusInd Bank, and Ultratech Cements also slipped by 1% to 2%.

Among the gainers were, L&T, NTPC, SBI, Kotak Mahindra Bank and Tata Motors.

Of the total 3,514 stocks listed on BSE, 1,615 stocks advanced while 1,772 stocks declined and 127 stocks were unchanged. A total of 196 stocks hit new 52-week highs, and 28 stocks touched new 52-week lows.

Due to heavy selloff, BSE-listed firms' market cap declined by Rs 1,94,971.62 crore in a single day. By the end of Friday's trade, the m-cap is at Rs 3,02,09,815.55 crore compared to the previous session's figures of Rs 3,04,04,787.17 crore.

Talking about market performance, Vinod Nair, Head of Research at Geojit Financial Services said, "The weak guidance from Infosys cast a shadow over the outlook of the Indian IT sector, causing a delay in Nifty's pursuit of the 20,000 mark. While the heavyweights surrendered to the bears, the small caps demonstrated resilience. 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."

Domestic equities took a pause just before the 20k zones. Nifty opened lower dragged by selling in IT heavyweights after Infosys lowered its FY24 growth guidance. Nifty closed with a loss of 234 points (-1.2%) at 19745 levels. Broader markets were mixed with the Nifty midcap 100 down -0.4% while the Nifty smallcap 100 was up +0.7%. Except for PSU Bank and Auto, all sectors ended in the red. IT, Consumer Durables, and FMCG were major laggards.

Moreover, smallcap stocks gained traction outperforming broader benchmarks, while midcap stocks were also under pressure.

Going ahead, Khemka added, "All eyes will be on the US Fed and ECB policy meeting next week. Investors would also take cues from various macro data that would be released. With the result season picking up pace, we expect a lot of stock-specific action and provide direction to domestic equities in the coming week. Apart from Index heavyweight Reliance, the Banking sector is also likely to be in focus as ICICI Bank and Kotak Bank would announce results over the weekend."

In the trading week from July 17th to 21st, Sensex gained by 541.20 points or 0.82% and Nifty 50 climbed by 173.65 points or 0.89%.

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