Sensex drops 351 pts on Infosys results, weak banking stocks

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Mumbai, Jan 13 (PTI) Stock markets fell sharply today,with the BSE benchmark Sensex plunging 351 points to 19,182 onbelow-expectation quarterly results posted by software majorInfosys and heavy selling in banking scrips on fears ofinterest rate hike.

Erasing yesterday''s gain of 338 points, the Bombay StockExchange sensitive index, Sensex, settled 351.28 points or 1.8per cent down at 19,182.82 points -- its lowest close sinceNovember 26, 2010. The index dropped 400 points in theintra-day trade and could not recover much.

Before yesterday''s gain, the Sensex had been on downwardspiral for six consecutive trading sessions.

The National Stock Exchange''s wide-based Nifty nosedivedby 111.35 points or 1.90 per cent to settle at 5751.90 points.

Market observers attributed the fall in the broadermarket to the not-so-good Infosys numbers and massive sell-offin the banking space as edgy investors feared another ratehike in a bid to tame rising inflation.

"Infosys results are disappointing as volume growth of3.1 per cent QoQ is the lowest in the last five quarters. Asit managed to get pricing increases, it seems like it isfocusing yet again on profitability against growth," EdelweissCapitalInstitutional Equities Research VP Ganesh Duvvuri said.

"Based on this quarter''s earning and Q4 guidance, we seeno scope for any further upgrade," he added.

IT bellwether Infosys Technologies posted 14.17 per centjump in consolidated net profit at Rs 1,780 crore for thethird quarter ended December 31, 2010, which, according tomarket players, was lower-than-expected level.

A slump of 4.82 per cent in Infosys shares sent themarket in a tizzy. The heavyweight stock had lost 5.15 percent in the intra-day session to finally close at Rs 3,212.30on the BSE. The country''s second largest software company wasa major reason behind the fall of the Sensex.

Besides, rate sensitive banking stocks also plagued themovement of the key index with top lenders, including SBI,ICICI Bank and HDFC Bank falling 3.91 per cent, 3.88 per centand 2.90 per cent, respectively, amid fears of a probablepolicy rate hike by RBI this month to tame inflation.

Among the sectoral indices, the banking index was thebiggest laggard, shedding 445.91 points or 3.53 per centto end at 12,170.03.

"Just when we thought that short covering in the F&Ospace could lift the markets further, today we saw freshshorts in the banking sector. The IT stocks remained underpressure following Infosys'' disappointing results andguidance, today�s fall was seen despite upbeat global cues,"IIFL Head of Research Amar Ambani said. .

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