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Sensex plunges over 1,000 points as heavyweights Infosys, HDFC Bank under selling pressure – Economic Times

NEW DELHI: Domestic stocks opened on a weak note on Monday morning, catching up with global markets after a long weekend. The quarterly results of HDFC Bank and Infosys last week fell short of market expectations, hurting investor confidence.

The two stocks alone contributed over 500 points in Sensex fall. They account for nearly 18 per cent of Nifty50 weightage.

Asian markets were also weak after Chinese GDP growth numbers, hurt by Covid curbs, came in at 4.8 per cent in March quarter. On the other hand, China’s economic hub Shanghai reported 2,417 confirmed locally transmitted Covid cases and 19,831 local asymptomatic carriers, which raised concerns over persistent supplies from the world’s factory.

At 9.22 am, the BSE Sensex was trading 994 points, or 1.70 per cent, lower at 57,344.92. The index was down over 1,100 points in early trade.

The Nifty50 was trading at 17,204.70, down 270.95 points or 1.55 per cent. Midcap and smallcap indices fared better, falling up to 1 per cent each. Markets across Hong Kong and Australia and most parts of Europe are closed for the day on account of Easter holiday.

“Globally managing inflation has taken precedence over growth as higher commodity prices, especially that of crude oil and agriculture commodities, has led to a surge in cost of living. With central banks around the world taking monetary measures to contain inflationary pressures, its possible impact on growth needs to be watched. Inflationary pressures have also been weighing on markets too given the possible impact on margins and thus earnings,” said Hemant Kanawala, Head – Equity at Kotak Mahindra Life Insurance Co.

Infosys was down 5.7 per cent at Rs 1,649. It also dragged other IT counters such as Tech Mahindra (down 4 per cent), HCL Tech (down 2.3 per cent) and Wipro (down 2.2 per cent).

On Infosys, global brokerage CLSA said: “While demand tailwinds should bring the revenue growth back on track soon, margin recovery may take time given persistent supply-side pressures. The consequent reset in estimates – we cut our FY23EPS forecasts by 5 per cent and FY24 by 4 per cent – could dampen investor sentiment in the near term. However, the stock’s 8 per cent YTD underperformance limits the downside, in our view.”

Falling for the eighth session, HDFC Bank fell 2.65 per cent to Rs 1,426. A host of brokerages have trimmed their price targets on the stock as they felt March quarter earnings growth at 23 per cent YoY was mainly driven by lower provisions.

“We believe two consecutive let-downs on core pre-provision operating profit coupled with merger uncertainty could weigh on the stock. On balance, at September 2023 P/BV of 3 times, retain ‘BUY’ with a target price of Rs 1,860,” Edelweiss said.

Meanwhile, World Bank slashing India’s FY23 GDP forecast to 8 per cent from 8.7 per cent added to the weak sentiment.

NTPC, Tata Steel, M&M, Power Grid, Nestle India and Hindustan Unilever were some of the Sensex stocks which rose up to 1.6 per cent.