Sensex falls to 7-month low as Infy forecast spooks markets

Index down 300 pts after IT major predicts below-expectation revenue growth

NEW DELHI: Shares of Infosys nose-dived by 21% on Friday and took down the broad stock market with it after the software major announced a disappointing earnings forecast with its quarterly results.

Infosys, famous for outperforming its peers, forecast a revenue growth in the range of 6 to 10% that was well below the industry average of 12 to 14%. That spooked investors. The benchmark Sensex fell 300 points or 1.6% to 18,243 — its lowest close in seven months — tracking Infosys, which has a 7.19% weightage in the the 30-share index.

“The ongoing global economic volatility intends to continue forward so we have to look where we are and make a reflection in our guidance that is a statement of facts,” said SD Shibulal, CEO and managing director of Infosys.

As its share fell to Rs2,295.5 from Rs2,918 overnight, Infosys lost as much as Rs35,740 crore in its market capitalisation on a single day. The company’s famed promoters — NR Narayana Murthy, Nandan Nilekani, S Gopalakrishnan and SD Shibulal — along with their family members saw their combined share wealth erode by Rs4,796 crore in the process.

During the January-March quarter of fiscal 2012-13 the net profit for Infosys grew by 3.4% to Rs2,394 crore, when compared with a year ago. Its rev- enue, from a year ago, rose by 18.1% to Rs 10,454 crore. The numbers were in line with analyst expectations but the outlook was a shocker.