Sensex snaps 3-day winning streak; TCS leads IT pack lower

Mumbai : Equity benchmarks ended three days of gains to close modestly in the red on Monday, weighed by bearish global cues and robust selling in IT counters following lacklustre Q1 results from TCS.

The rupee dropping to a fresh lifetime low against the US dollar further sapped risk appetite.

The 30-share BSE Sensex, which opened on the backfoot, witnessed strong buying in late-afternoon trade. However, it could not sustain the momentum and closed 86.61 points or 0.16 per cent lower at 54,395.23.

On similar lines, the broader NSE Nifty dipped 4.60 points or 0.03 per cent to end at 16,216.

Bharti Airtel was the biggest loser among the Sensex constituents, dropping 5.03 per cent, followed by TCS which lost 4.64 per cent after its earnings failed to match market expectations.

The country's largest software exporter TCS on Friday reported a 5.2 per cent rise in June quarter net profit to Rs 9,478 crore, restricted by the impact of annual wage hikes and promotions that took operating profit margins to multi-quarter lows.

Spooked by the results, other IT stocks too suffered strong losses in Monday's session, with HCL Tech, Infosys, Wipro and Tech Mahindra shedding up to 4.10 per cent.

In contrast, Tata Steel, M&M, Dr Reddy's, ICICI Bank, Asian Paints, Axis Bank and Reliance Industries climbed as much as 3.04 per cent.

"As the domestic market turned its focus towards quarterly results, the weak start of IT earnings wounded the sentiments, forcing benchmark indices to open on a weak note. However, with support from banking, metal and energy stocks, the domestic market managed to pare its losses to close flattish," said Vinod Nair, Head of Research at Geojit Financial Services.

Ajit Mishra, VP - Research, Religare Broking, said amid the mixed global sentiment, the focus should be on the upcoming macroeconomic data (IIP and CPI) and earnings for cues.

"We reiterate our positive view and expect Nifty to test 16,500 soon. Participants should align their positions accordingly and continue with the 'buy on dips' approach till the Nifty holds 15,900 levels," he noted.

In the broader markets, the BSE smallcap gauge jumped 1.07 per cent and the midcap index gained 0.63 per cent.

Among BSE sectoral indices, teck fell the most by 3.08 per cent, followed by IT (2.70 per cent), capital goods (0.38 per cent) and telecom (0.06 per cent).

Power emerged as the biggest gainer with a jump of 4.21 per cent, followed by utilities (4.17 per cent), oil & gas (1.97 per cent) and energy (1.84 per cent).

World markets traded lower ahead of release of US inflation data, which will provide clues on further rate hikes by the Federal Reserve.

In Asia, markets in Shanghai, Hong Kong and Seoul settled lower following reports that China has imposed fines on tech giants Tencent and Alibaba. However, Tokyo closed in the green.

Bourses in Europe were trading lower in mid-session deals. The US markets had ended on a mixed note on Friday.

Meanwhile, international oil benchmark Brent crude declined 1.48 per cent to USD 106.3 per barrel.

The rupee depreciated by 22 paise to close at a fresh lifetime low of 79.48 (provisional) against the US dollar on Monday.

Foreign institutional investors remained net sellers on Friday, offloading shares worth Rs 109.31 crore, as per exchange data.