Sensex sheds over 450 points, IT stocks down

MUMBAI, INDIA: The BSE Sensex fell as much as 2.65 per cent on Friday and is on course to log its fourth straight weekly loss, dragged by a battering of global equities on growing worries that the U.S. economy was sliding back into recession.

Lingering worries about a slowdown in India's economic growth and profitability of domestic companies due to surging interest rates also weighed on investor sentiment.

Infosys, India's No. 2 software services company, led the losses in the market, falling as much as 7.5 per cent to their lowest level in more than 21 months on worries about a sharp drop in outsourcing demand in a weak global economy. At 2.10 p.m. IST Infosys shares were at Rs 2183.60.

India's showcase $76 billion software and services sector, which has already been reeling under competitive pressure and sluggish demand, counts the United States and Europe as the two biggest markets.

BSE index was trading down 2.65 per cent, or 436.04 points, at 16,033.75.

The index, which is down more than 21 per cent this year, had earlier fallen as much as 2.2 per cent to 16,114.60 points -- its lowest since May last year.

"We already have a slightly gloomy prospect on the domestic macro front and to top it the global economy is looking much worse now than it was six months ago," said Nitin Rakesh, chief executive of Motilal Oswal Asset Management Company.

"In a global environment like this, it is very difficult to predict the course of the market. We just have to wait it out."

Asian stocks extended losses, with South Korea's benchmark shedding 5 per cent on Friday, and gold prices rose to an all-time high as investors rushed into safe-havens after heavy losses on U.S. and European markets overnight.

European equities suffered their biggest daily slide in 2-1/2 years on Thursday, while the S&P 500 index fell 4.5 per cent, the sixth time in two weeks that it has moved by 4 per cent or more in a single session.

Concerns about a slowdown in Asia's third-largest economy added to the negative cues from the overseas markets. Morgan Stanley had pared this week its growth forecast for the current fiscal year to 7.2 per cent from 7.7 per cent earlier.

Shares in software exporters that have large exposure to the United States also took a hit on prospects of a cutback in technology spending by their overseas clients and pressure on pricing for their services.

Tata Consultancy Services, the sector leader, fell 4.27 per cent to Rs 921.00, down Rs 41.10. Wipro dropped 2 per cent to Rs 321.20. At one point it had touched the lowest to Rs 310.50, its lowest level in nearly two years. Bharti Airtel was down 2.57 per cent at Rs 381.70.

HCL Technologies Ltd, the No. 4 software services firm, dropped as much as 7.8 per cent to Rs 365.70 at one stage after falling more than 6 per cent in the previous session. However, by afternoon it regained considerably and was at Rs 390.70, down 1.54 per cent.

Shares in index heavyweights Reliance Industries and the country's No. 2 lender ICICI Bank, dropped 2 per cent and 1.9 per cent, respectively, on selling by institutional investors.

The 50-share NSE index was down 1.8 per cent at 4,855.10 points.

In the broader market, losers were ahead of gainers in the ratio of 5.8:1 with 322 million shares changing hands.