Indices give up early gains on weak TCS results

After trading firm till noon with broad-based gains, the market started losing ground early in the afternoon. The first trigger was the news of large short positions built by FII's in the futures segment yesterday. This is an indication that the foreign investors are not very positive about the market direction in the short term.

Then came the painful surprise from software major TCS. Even after the weak guidance from Infosys, the market was not ready for a bad Jan-March quarter from TCS. In fact analysts were expecting both revenues and profits to grow as compared to the previous quarter. But to everyone's surprise, the company's profits declined over 30 per cent even as revenues remained flat.

Immediately after the results came in, the markets tanked and the software stocks were the worst hit. TCS went down over 10 per cent at one point before closing with losses of over eight per cent.

Satyam and Wipro, which are set to announce their results shortly, also crashed after trading firm in morning trades. Investors are worried about the results of these companies in the wake of TCS experience. Infosys, which was trading with gains of over two per cent in the morning, gave up all of it and closed flat. Infosys announced an order win for its Flexcube banking software from a Greek bank.

Sensex closed at 6135, down 22 points and the Nifty at 1909, down 18 points. The fall in Nifty was more severe as TCS is a part of Nifty but is not present in Sensex. Nifty April futures discount to the spot index widened to 22 points.

Among index stocks, VSNL, Colgate and HDFC Bank were the major percentage gainers while TCS, ABB and Oriental Bank of Commerce were the major losers.