Indian stock market over-reliant on IT stocks? TCS, Infosys, and others push Sensex down 700 points, Nifty down 200 points

Indian equity markets received another dose of reality on July 11 when markets—heavily reliant on the performance of top IT majors—opened in the red. Benchmark indices Sensex and Nifty dropped at least 0.7 per cent each.

In the first two hours of morning trade, the BSE Sensex dropped more than 700 points to almost touch 82,500 while the NSE Nifty 50 shed at least 200 points to cross below 25,150—and it kept going down.

TCS shares fell by as much as 2.3 per cent, as the market punished the IT major for less-than-impressive quarterly earnings. On Thursday, Tata’s IT arm posted a 6 per cent rise in quarterly net profit of ₹12,760 crore. However, the revenue was only ₹63,437 crore—a dip of more than 3 per cent on a constant currency basis.

“Q1 results of TCS indicate continuing struggle for IT companies, particularly large-cap IT. However, midcap IT is likely to do well,” said V.K. Vijayakumar of Geojit Investments.

TCS was joined by Mahindra, Bajaj Finserv, Airtel, BEL, Reliance, and rival Infosys as the major losers in the 30-pack index. More than 20 constituents were trading in the red in the morning session. Both Infosys and HCL Tech traded close to 1.5 per cent lower.

The rout in the markets happened despite foreign institutional investors returning to Indian equities—they turned net buyers, buying ₹221.06 crore worth of equities on July 10. However, this did not help the markets on the day either, as the Sensex settled 0.41 per cent lower and the Nifty 0.47 per cent lower at the market close.

Business