Infosys shares extend losses as leadership issues outweigh share buyback

Cornelia Mascio
Agosto 22, 2017

The attractive share buyback at Rs 1,150 apiece announced on Saturday could not stem the free fall as many brokerages have downgraded the stock, factoring in tough times ahead.

The 30-share BSE Sensex was down 265.83 points or 0.84 percent at 31,258.85 and the 50-share NSE Nifty dropped 83.05 points or 0.84 percent to 9,754.35.

US stocks ended lower on Friday after the White House announced that Steve Bannon would be leaving his job as chief strategist.

JP Morgan has downgraded the stock to neutral from overweight and slashed target price to Rs905 from Rs1,075 per share.

"The reports about class action suits being planned by top three United States law firms against the company to recover losses suffered by investors have raised doubt about the company's buy back plan". "Our multiple is reduced to reflect the twin perils of internal corporate battles and a challenging business environment that the company will now have to navigate", HDFC said in a note. "The markets are in for some correction going ahead after a sustained rally over the last few months, as lackluster June quarter earnings do not support valuations".

The benchmark Sensex turned choppy in late morning deals to trade marginally lower by 29.48 points at 31,495.20 and the broader Nifty was trading below the key 9,850 level.

Markets are focusing on any significant policy statements coming out of Jackson Hole, Wyoming. "This shifting will continue in IT counters such as TCS", said Chandan Taparia, derivative analyst, Motilal Oswal Financial Services.

Foreign portfolio investors have net sold local shares worth $1.48 billion so far this month until August 18, National Depository Services' website showed.

European markets ended Friday's session firmly in negative territory after a deadly terror attack in Spain. There were 680 advances, 816 declines and 455 unchanged stocks on NSE reflecting mixed sentiments floating in the market.

Infosys, the country's second-largest Indian IT services firm, fell as much as 6 percent, extending Friday's slump of about 13 percent. Under Vishal Sikka, Infosys stock outperformed its rivals during the last three years. IT sector continued to suffer as index heavyweight on Monday.

Other big gainers were Lupin, Axis Bank, Wipro, Tata Motors, Sun pharma, Hindustan Unilever, ONGC, Coal India, Cipla, Dr Reddy's, Bharti Airtel and Reliance Industries, rising by up to 1.62 per cent. The bank has identified more cases for insolvency proceedings, reported BloombergQuint.

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