April 13, 2012 / 12:35 PM / in 7 years

REFILE-Indian shares drop to 2-week low, Infosys hit by outlook

(Fixes wording in second, fourth paragraphs)	
    * Infosys outlook disappoints, sparks IT sell-off
    * Inflation, RBI next week to extend caution
    * Banks reverse recent rally on profit-taking

    By Abhishek Vishnoi	
    MUMBAI, April 13 (Reuters) - India's main index fell more
than 1 percent to a two-week low on Friday, as technology stocks
dropped after bellwether Infosys kick started the domestic
corporate earnings season with a disappointing revenue outlook.	
    The forecast from India's No.2 software services exporter
sparked worries about the country's $100 billion outsourcing
sector, as well as about the broader outlook for corporate
profits. 	
    A fall in European shares on renewed concerns about rising
borrowing costs in Spain accelerated the domestic share falls
during afternoon trade, making for a volatile session. 	
    Caution is likely to prevail early next week, given
inflation data is due out on Monday, while the Reserve Bank of
India meets for what's seen as a critical policy meeting on
Tuesday.	
    "Today's selling was a mix of Infosys results and fresh
worries in Europe," said Sandeep J. Shah, CEO of investment
advisory firm Sampriti Capital, adding that markets would now
focus on the RBI meeting.	
    The 30-share Sensex fell 1.37 percent to close at
17,094.51 points, its lowest close since March 29.	
    The broader Nifty closed 1.32 percent lower at
5,207.45 points.	
    Shares in Infosys dropped 12.7 percent, after
earlier falling as much as 13.1 percent to its lowest since late
September. 	
    The decline came after Infosys forecast full-year dollar
revenue at 8-10 percent, compared with market expectations for a
rise of 10-15 percent. 	
    The weak outlook dragged down domestic rivals, sending
sector leader Tata Consultancy Services down 5.6
percent and Wipro down 4.5 percent. 	
    The steep falls in the IT sector soured overall sentiment,
leading to profit-taking among recently outperforming sectors.	
    Banks reversed earlier gains, with a sub-index 
losing 0.9 percent to post its first fall in four sessions.	
    The RBI is widely expected to cut on Tuesday the repo rate
 by 25 basis points for the first time since April
2009, but could keep the cash reserve ratio steady
after slashing it by 125 bps this year. 	
    "It will be just a 25 bps repo cut .... CRR cut would not
make sense as liquidity is fine," said Sampriti's Shah.	
 Among banks, State Bank of India lost 0.7 percent,
while ICICI Bank fell 1.6 percent.	
    However, among gainers, Indian cement producers rose after
Citigroup upgraded Ambuja Cements, ACC and
UltraTech Cement to "buy" from "sell," citing rising
demand, among other factors. 	
    Shares of Indian airline companies extended a recent rally
on mounting expectations their foreign peers will soon be
allowed to buy stakes in them. 	
    SpiceJet surged 10.2 percent, while Jet Airways
 gained 1.4 percent.  	
     	
    For full list of Indian shares that moved during the day,   
 	
please see MARKET EYE items.       	
        	
    FACTORS TO WATCH                   	
  * Euro pressured as Spain borrowing concerns grow      
 	
  * Oil slips as China growth lags forecast               
 	
  * World shares steady after Chinese GDP           
 	
  * Foreign institutional investor flows       
 	
  * For closing rates of Indian ADRs                    
 	
       	
              	
    ASIA-PACIFIC STOCK MARKETS:          	
 Pan-Asia........ Japan.......   S.Korea... 
 	
 S.E. Asia.......        Hong Kong...  Taiwan.... 
 	
 Australia/NZ....        India.......  China..... 
 	
     	
    OTHER MARKETS:          	
 Wall Street ....        Gold ....... Currency.. 
 	
 Eurostocks.....        Oil ........  JP bonds... 
 	
 ADR Report .....      LME metals. US bonds.. 
 	
 Stocks News US.. Stocks News Europe    
 	
             	
    DIARIES & DATA:          	
Indian Data Watch   Asia earnings diary 
 	
U.S. earnings diary    European diary       
 	
Indian diary          Wall Street Week Ahead  
 	
Eurostocks Week Ahead              	
          	
    TOP NEWS:          	
 For top Asian company news, double click on:          
 	
 U.S. company news     European company news 
 	
 Forex news            Global Economy news 
 	
 Technology news      Telecoms news       
 	
 Media news          Banking news          
 	
 Politics/General news   Asia Macro data      
 	
     	
  A multimedia version of Reuters Top News is available at:     	
    	
 topnews.session.rservices.com          	
          	
    LIVE PRICES & DATA:          	
 World Stocks           Currency rates   
 	
 Dow Jones/NASDAQ    Nikkei                
 	
 FTSE 100                  Debt      
 	
 Indian rupee             LME price overview    
 	
	
	
    	
	
 (Editing by Rafael Nam)
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