Sell-off in TCS, HCL Tech pulls Sensex down over 100 points

Indian markets ended near the low point of the day, dragged down by IT stocks due to thesell-off in Tata Consultancy Services and HCL Tech, both of which reported stellar earnings in the September quarter. Infosys, which had posted strong numbers last week, also retreated.

While the BSE Sensex closed down 136 points at 20410, the Nifty closed down 43 points at 6045.

The biggest Sensex losers were TCS down 5.3 percent, Tata Motors down 4 pct, and L&T down 3.9 percent.

BSE IT, capital goods index are the top sectoral losers.

IT firms beat Street estimates despite the sharp slowdown in the Indian economy.

[caption id=“attachment_1011095” align=“alignleft” width=“380”]  While the BSE Sensex closed down 136 points at 20410, the Nifty closed down 43 points at 6045. Reuters[/caption]

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The sharp fall in the rupee led to windfall gains for most IT majors in the September quarter. However, TCS and HCL Tech had already run-up sharply prior to earnings announcement leading investors to book profits.

Axis Bank closed up 1.26 percent after it reported a net profit of Rs 1,362.3 crore for the September quarter, up 21 per cent, against a net profit of Rs 1,123.5 crore in the same quarter last fiscal.

The foreign institutional investors bought shares worth Rs 1,136.23 crore while domestic institutional investors were net sellers worth Rs 1,035.34 crore on Tuesday as per the provisional data from the National Stock Exchange.

R Sukumar, MD and CIO of Franklin Asian Equities feels that the current valuations of the Indian market are attractive for long-term investors. As and when the economy picks up, it will positively impact the topline growth for many companies and thereby boost their earnings, he said in an interview with CNBC-TV18.

However, he expects the July-September earnings and return on equities to be depressed, he told CNBC-TV18 in an interview. On specific stocks, he prefers private sector banks over public sector banks given the former’s increasing market share.

Arvind Sanger of Geosphere Capital Management on the other hand warned that the worst of earnings season is not over.

In an interview with CNBC-TV18, Sanger termed the recent rally as a relief one since the US debt default risk has gone away in the short-term , but global macros continue to witnesses some tailwinds.