(Bloomberg) -- Infosys Ltd. (NS:INFY) dragged India stocks lower after an anonymous whistle-blower complaint alleged the software exporter used irregular practices to shore up profits.
The S&P BSE Sensex declined 0.3% to 39,186.62 as of 10:04 a.m. in Mumbai. The NSE Nifty 50 Index rose 0.1%. Infosys sank as much as 16%, weighing the most on both gauges and offsetting post-earning gains in HDFC Bank Ltd . (NS:HDBK) and Reliance Industries Ltd. (NS:RELI).
Infosys Ltd. plunged after a letter addressed to company’s board and published by the Deccan Herald newspaper charged the company Chief Executive Officer Salil Parekh of “unethical practices” in recent quarters to boost “short term revenues and profits.”
The company, to ensure independence in investigations, has recused the company’s CEO and CFO from the matter, Infosys Chairman Nandan Nilekani said in a statement to stock exchanges.
Of the 10 Nifty companies that have announced results so far, six have either met or exceeded analyst estimates. Today, private sector lenders Axis Bank and Kotak Mahindra Bank are scheduled to announce results.
Strategist View
- “We expect the Infosys whistle-blower complaint to be negative for market sentiment. We await developments on the investigation as corporate governance issues are serious,” said Naveen Kulkarni, analyst at Reliance Securities Ltd.
- “The issue (Infosys complaint) is likely to remain an overhang on the stock in the near-term given it raises questions over the credibility of the current management,” Arya Sen and Ankur Pant, analysts with Jefferies India Pvt Ltd. wrote in note.
- Fifteen of 19 sector sub-indexes compiled by BSE Ltd. advanced, led by a gauge of consumer durable companies
- HDFC Bank provided the biggest boost to the Sensex advancing 1.3%; Yes Bank had the biggest gain, rising 7.4%
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