Key share indices ended over 1.3% down on Friday dragged by Infosys after the IT bellwether reported disappointing fourth quarter earnings and offered lower dollar revenue and EPS guidance for FY13. Further, weak European cues also dampened sentiment
The 30-share Sensex ended down 238 pts at 17,094 and the 50-share Nifty ended down 69 pts at 5,207.
Asian markets ended with gains. The Nikkei rose 1.2% and the Hang Seng surged 1.8% while the Shanghai Composite ended marginally higher by 0.3%.
Meanwhile, European shares were down in early trades after China reported its slowest first quarter growth in three years. The CAC-40 and DAX were down over 1% each while the FTSE-100 was down 0.5%.
The BSE IT index was the top loser down 9% while Bankex and Realty indices each ended nearly 1% down.
However, gained include Healthcare and FMCG indices.
Infosys was the top Sensex loser recording its biggest single day fall in past nine years.
The stock ended down 12.6% at Rs 2,403 after reporting 4.8% quarter-on-quarter (Q-o-Q) drop in its consolidated revenues at Rs 8,852 crore for the fourth quarter ended March 31, 2012.
Analyst expected revenues of Rs 9,124 crore from the India's second largest software services exporter.
Earnings before interest and tax (EBIT) too dropped 8.7% Q-o-Q to Rs 2,647 crore, while EBIT margin dropped at 29.9% in the fourth quarter of FY12 as against 31.17% in the previous quarter.
However, the IT firm has reported slightly better than expected net profit of Rs 2,316 crore for the Q4 of FY12, a fall of 2.3% QoQ.
Analyst expected it at Rs 2,294 crore.
"The year ahead looks challenging for the IT services industry, with slow recovery in the global markets," said S. D. Shibulal, CEO and Managing Director.
Meanwhile, Infosys has guided for 8-10% growth in dollar revenue terms which is much lower than expectations of 12-15%.
The company expects FY13 dollar revenues at $7553-7692 million. The FY13 EPS guidance is expected at Rs 158.76-161.4 (at assumed currency rate of INR50.88/USD).
Among other software majors, TCS was down nearly 6% and Wipro ended down 4.2%.
Other Sensex losers include ICICI Bank down 1.7% and Larsen & Toubro down 1.4%.
However, defensive shares such as pharma and FMCG were gainers along with rate sensitives such as autos.
Rate sensitive stocks gained on hopes that the Reserve Bank of India will cut the key rates at its upcoming monetary policy review.
FMCG majors ITC and Hindustan Unilever were both gained nearly 1% each while Tata Motors, Hero MotoCorp and Maruti Suzuki were gainers in the auto sector.
In the pharma segment, Sun Pharma ended up 2.6% while Cipla gained 0.3%.
Among others, shares of airlines companies such as Jet Airways, SpiceJet and Kingfisher Airlines rallied 2-10% on the bourses on reports that the Civil Aviation Minister Ajit Singh confirmed that the issue of allowing foreign airlines to buy up to 49% in Indian carriers, mostly cash-starved, will come up before the Cabinet at its next meeting.
Mangalore Refineries and Petrochemicals has dipped 4% to end at Rs 63.85 after the company said it has shut down two-third of its 15 million tonne refinery in Karnataka due to shortage of water.
BASF has zoomed 13% to end at Rs 618, extending its past two day's 8% rally, after the company on Wednesday said that it will invest Rs 1,000 crore to set up a new production facility at Dahej in Gujarat.
In the broader markets, the BSE Mid-cap index ended down 0.7% and the Small-cap down 0.6%.
The overall breadth ended weak with 1,566 losers and 1,560 gainers on the BSE.