Markets ended in the red on continued weakness in IT stocks. The Sensex dropped to a low of 18,326 and after an attempt at recovery, finally ended with a loss of 310 points at 18,411.
The Nifty ended down 90 points at 5,526.
"Second half of the fiscal year will be much better than the first half. Also concerns on growth and government policy appear over done. Markets have discounted downgrades in earnings Some more clarity on Direct Tax Code and opening up FDI in retail and Insurance will be positive triggers for the market," said Toral Munshi, Vice President , Head India Equity Research, Wealth Management from Credit Suisse.
The IT index saw tremendous selling pressure after IT major Infosys came out with its numbers before market opening today. The index dropped nearly 3% to 5,925.
IT bellwether Infosys tumbled 4.3% to Rs 2,2,794 after reporting a 5.3% quarter-on-quarter decline in consolidated net profit at Rs 1,722 crore for the first quarter ended June 30, 2011 under IFRS.
The company had a net profit of Rs 1,818 crore in the March quarter of the previous fiscal (2010-11), Infosys said in a filing to the Bombay Stock Exchange. On a year-on-year basis, the company has reported a 15.7% growth in net profit.
"We are disappointed with the guidance. The company expects the full-year EPS in the range of Rs 128 130, as compared to the market expectation of Rs 132. This has caused the stock to fall sharply post results," said Sanjeev Hota, Asst. Vice President Research (IT), Sharekhan.
Meanwhile, a weak cues from global markets and changes in the political front also dampened sentiments.
The cabinet reshuffle saw seven ministers being dropped while eight new faces has joined the cabinet. However, Prime Minister Manmohan Singh has left the 'big four' -- Finance, Home, Defence and External Affairs -- untouched.
Asian markets slipped following cues from Wall Street after US markets suffered the worst day in a month. Concern about the stalemate in US budget talks and growing debt problems in the euro zone prompted investors to hedge against further losses.
Hang Seng dropped 3%, followed by Seoul and Jakarta Composite. Markets in Italy recovered into the green after dropping as much as 7% in the day.
Meanwhile, industrial growth fell to 5.6% in May this year from 8.5% in the same month last year, mainly due to the poor performance of the manufacturing and mining sectors. According to data released here, industrial growth in April-May this year averaged 5.7%, compared to 10.8% in the same period last year.
Other than Infosys, Larsen & Toubro, HDFC Bank and HDFC exerted pressure on the benchmark - contributing to its fall.
Emami gained 3.5% to Rs 516 on plans of investing Rs 65 crore to set up the country's first ayush gram in Uttarakhand. JSW Energy gained around 7% today after being included in futures and options segment by the National Stock Exchange are in the limelight in an otherwise subdued market. Among Pharma stocks, Wockhardt gained 6% at Rs 418.
Earlier in the day, it touched a high of Rs 430 - its highest in over 3 years.
Realty, auto and metal stocks were also in red. The indices slipped around 2% each today. Broader markets outperformed and ended down 1% each.
BSE market breadth was negative with 63% stocks declining as against 32% on the advancing side.
