Infosys as a practice declares its results between the 9th and 14th of the month and these results are declared well before trading begins for the day. Friday was no exception and this time the numbers were probably below what the street expected and the results were unsatisfactory. The share was quite steady and after the initial fall at open remained around the Rs 2500 mark till 1pm. There the stock cracked and it made the rest of the market crack as well. Call it the Infosys factor or Friday the 13th factor. The markets fell very sharply. , Infosys lost Rs 346.75 on a single day which contributed to 202 points on the SENSEX fall. All in all the weekly loss on Infosys was Rs 447 or 15.68%. The company has reported lower turnover compared to the December 11 quarter. The revenue is lower in rupee terms by 4.8% at Rs 8,852 crs and in dollar terms lower by 1.9% at $1,771 million. The company has also said that it would not increase salaries of its employees and this affected the company and the sector.
It is interesting to note that the Rs 250 fall in Infosys was digested by the markets and they remained in positive even after this fall. ITC, Reliance and Tata Motors kept the fall under check but very clearly it appears that there was basket selling around 2pm which led to this sharp crack.The whole market was affected by mid-afternoon and we had a huge fall by day end of 238 points and the intraday difference between the high low was 368 points. The contagion effect on the IT sector was witnessed with TCS losing Rs 108.80 or 9.23% to close at Rs 1069.55. Wipro lost Rs 18 or 4.10% to close at Rs 420.95. The BSEIT lost 11.14% for the week and has changed the sentiment in the markets from optimistic to one of confusion and being neutral.
The guidance given for the current quarter and year is one of a cautious nature and is betting on revival of fortunes in the US and European economies. The growth projected is however lower than that predicted by the IT industry association. The salary hike not happening could be underplayed with the same being postponed for the time being and being granted when there is better visibility. Industry is in a similar position and some companies have resorted to salary cuts, and as such it does not imply that employees would necessarily leave organisations.
Infosys has reacted sharply and this is the biggest fall in about nine years. The important thing to see would be whether results from other companies in the IT space give similar feelings or Infosys becomes a standalone case. The fall is likely to get arrested in the week ahead and one should not be surprised if there is a slow and steady recovery in the coming days.
It would be quite some time before one is able to say with conviction that it was Infosys or Friday the 13th which spooked the markets.
