Synopsis: Infosys stock declined by 5.71% to Rs 1816.10 on the BSE, despite being up 10% in the past year. Axis Bank shares dropped 5.31% to Rs 985 due to disappointing Q3 results. Sensex and Nifty suffered significant losses, influenced by Axis Bank’s earnings and Infosys’ revised FY25 revenue guidance.
The Indian stock market faced a turbulent session on Friday morning, with benchmark indices Sensex and Nifty experiencing sharp declines.
Infosys and Axis Bank emerged as key contributors to the downturn, overshadowing the positive Q3 performances of Reliance Industries Ltd (RIL) and Infosys itself.
Infosys and Revised FY25 Guidance:
Infosys shares plunged 5.71%, hitting a low of Rs 1816.10 on the BSE.
Despite a 10% increase over the past year, the company’s revised FY25 revenue guidance raised concerns.
Analysts highlighted potential de-growth in Q4 in constant currency (CC) terms and muted large deal wins, casting doubts on double-digit growth expectations for FY26.
Sharekhan noted that Q4 projections imply a sequential decline, citing seasonality, fewer working days, and reduced third-party revenue.
Infosys’ contribution to the 400-point decline on Sensex was substantial, accounting for 322 points.
While the company’s upward revision of FY25 revenue guidance was a positive sign, the underlying concerns prompted significant selling pressure.
Axis Bank Disappoints Analysts:
Axis Bank shares fell 5.31% to Rs 985 following Q3 results that missed expectations on multiple fronts.
Analysts cited increased slippages in agri and unsecured loans, high credit costs compared to top peers, and sluggish deposit growth.
IIFL Securities forecast muted mid-single-digit EPS growth for FY26 and noted that the bank’s re-rating would be gradual as profitability gaps with peers narrow.
Axis Bank, along with private banking peers such as ICICI Bank, HDFC Bank, and Kotak Mahindra Bank, collectively contributed 300 points to Sensex’s fall.
Global and Domestic Factors:
V K Vijayakumar of Geojit Financial Services pointed out that declining US bond yields and the dollar index were insufficient to offset foreign institutional investor (FII) selling.
However, he noted that Nifty’s valuation, now trading at 19 times estimated FY26 earnings, presents opportunities for long-term investors to accumulate high-quality large-cap stocks during corrections.
Reliance Industries Offers Respite:
Reliance Industries provided a glimmer of positivity amid the downturn.
The stock gained 2.14% to Rs 1,295.85, driven by strong Q3 results that impressed analysts.
Brokerages upgraded the stock to a ‘Buy’ from ‘Hold,’ citing attractive valuations after a 19% decline over the past six months.
Other Major Movers:
Beyond Infosys and Axis Bank, notable Sensex losers included ICICI Bank, TCS, Kotak Mahindra Bank, HCL Tech, HDFC Bank, and IndusInd Bank, with declines of up to 1.7%. Reliance Industries’ positive performance partially offset the broader market losses.
Conclusion:
The Indian stock market’s performance on Friday underscores the sensitivity of indices to corporate earnings and guidance.
While Infosys and Axis Bank’s disappointing aspects triggered a broader sell-off, Reliance Industries’ robust results offered some relief.
Analysts recommend that long-term investors leverage market corrections to acquire quality large-cap stocks, emphasizing resilience in the face of volatility.
As market dynamics continue to evolve, focusing on sound fundamentals and diversified portfolios remains crucial.
Disclaimer:
This article is for informational purposes only and does not constitute financial advice. Readers are encouraged to consult a qualified financial advisor before making investment decisions.
