Indian stocks slip as tech worries weigh

Indian stocks lost early gains to trade lower on Monday, with the information technology sector remaining under pressure after results and guidance from Infosys Technologies Ltd. disappointed investors last week.

The Sensex XX:SENSEX -1.51% fell 168.47 points, or 0.9%, to 19,218.35, led by declines of more than 2% for shares of Infosys IN:500209 -2.89% ; Cipla Ltd. IN:500087 -1.46% ; Tata Consultancy Services IN:532540 -3.07% ; and DLF Ltd. IN:532868 -5.16%

Shares of Hero Honda Motors Ltd.IN:500182 +2.33% bucked the trend, rising 3% after the auto maker last week announced an interim dividend to 70 rupees per share.

The S&P/CNX Nifty XX:NIFTY -1.64% fell 0.9% to 5,769.70.

The drop in Infosys shares follows a 9.6% slide on Friday after the firm said profit for its quarter ended March 31 rose by a smaller-than-expected 13.6% from the year-earlier period as costs outpaced growth in revenue.

Net profit rose to 18.18 billion rupees ($408 million) from 16.00 billion rupees in the year earlier period. Analysts polled by Dow Jones Newswires expected the company’s profit to rise to 18.81 billion rupees.

For the current financial year that started April 1, Infosys said it expects an 8% to 10% growth in earnings per share in U.S. dollar terms, to a range between $2.83 and $2.88. Current financial year revenue is expected to climb 18% to 20% to $7.13 billion to $7.25 billion.

Deutsche Bank, however, said that the quarterly miss was a “one-time phenomenon” and that the software-maker’s management was “unduly conservative” in its guidance.

Among the offsets expected by Deutsche Bank is that Infosys should continue to benefit from increased hiring at lower wages, which should bring down its overall wage inflation and cost base.

Investors worried about the information technology’s prospect will next turn to results from Tata Consultancy Services IN:532540 -3.07% due on Thursday.

The banking sector, also a key component for the market’s overall earnings growth, fell 1% , with investors awaiting quarterly results earnings from HDFC Bank Ltd.IN:500180 -1.77% later Monday.

Marketwatch