Tech stocks drag BSE Sensex down 139 points; Ranbaxy plunges to 7-year low
The Bombay Stock Exchange (BSE) Sensex ended 1.03 percent down on Monday as investors offloaded tech stocks following Infosys Technologies' weak future guidance even as Ranbaxy Laboratories found itself entangled in a new legal battle with the US Government accusing it of committing fraud, concealment and selling substandard drugs in the US market.
The 30-share benchmark index lost 139.34 points to close at 13,330.51, with half of its components closing in the red. The index touched an intraday high of 13,559.36 and a low of 13,269.62 and is still down 34.3 percent this year.
The top loser of the day was India's largest generics drug maker, Ranbaxy Laboratories, which plummeted 10.45 percent to a 7-year low of Rs.475.90.
Investors offloaded the stake fearing erosion of stock value with the US Food and Drug Administration (US FDA) accusing it of forging and concealing documents relating to an investigation into the quality of the company's drugs sold in the US market.
Tech stocks fared badly with Satyam Computer Services, Infosys Technologies, Tata Consultancy Services (TCS) and Wipro plunging 7.92 percent, 7.18 percent, 3.79 percent and 1.92 percent to close at Rs.409.25, Rs.1556.10, Rs.768.95 and Rs.412.30 respectively.
Market analysts have blamed the decline of tech stocks on weak future guidance issued by IT bellwether Infosys Technologies last week. While announcing Q1 results of FY09, Infosys said the global economic environment continues to be uncertain and challenging with IT spending either flat or marginally down.
"There is still a lot of pain," Infosys CFO V. Balakrishnan said, referring to large US banks struggling with the fallout from the US subprime mortgage crisis.
"So the environment has not changed. We want to be cautious," he said.
Financial stocks also ended lower with banks bracing themselves for the central bank's move of further hiking key interest rates. Banks are forced to hike commercial lending rates to keep up with central bank's rates and are put at risk of losing customers who find securing loans more difficult.
Housing Development Finance Corporation (HDFC), HDFC Bank and ICICI Bank tripped 3.38 percent, 3.26 percent and 1.98 percent to close at Rs.1932.90, Rs.1032.70 and Rs.579.85 respectively.
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