Markets closed near the day's low, a sign of bearish outlook going forward.
Infosys, India's second biggest software exporter plunged 12.6% to Rs 2,402.20. The company said FY13 dollar revenue is likely to moderate to 8-10% against expectations of 12-15%.
"If you look at the sector, the market has been having a lot of expectation from the IT sector. It was one of the few sectors expected to report 15-20% growth and in that backdrop these numbers are a huge disappointment," Nilesh Shah, MD & CEO of Envision Capital told NDTV Profit.
The stock was singularly responsible for the loss of over 200 index points on the Sensex.
"Volumes give a sense that the stock is moving towards 2,300 levels in the next couple of sessions...it will be difficult for the stock to close above 2,600," Ashish Chaturmohta, vice president of IIFL Wealth said.
Infosys' guidance, a benchmark for the sector, disappointed the Street and triggered a massive selloff in other IT stocks too. TCS, India's largest IT firm, declined 5.5% while Azim Premji promoted Wipro was down 4.1%. The IT index on the BSE plunged nearly 9%, the most among the 14-sectoral indices on the BSE.
The company's fourth quarter results, however, were more or less in-line with Street expectations. Q4 sales declined 4.8% to Rs 8,852 crore against Rs 9,292 crore in Q3 while net profit fell 2.3% to Rs 2,316 crore against Rs 2,370 crore.
"The guidance coming in single digit is too much of a shocker... the Street expected bad numbers though numbers are not bad but the real shocker came in the guidance," Sharmila Joshi, head (equity) at Fairwealth Securities told NDTV Profit.
On the Nifty index, defensive stocks like drug makers Dr Reddy's (2.5%) and Sun Pharma (2.2%) gained.
Markets held up for most part of the day but a selloff on European bourse over rising bond yields in Spain dented sentiments. France's CAC 40 index traded with over 1% cut at 4.10 pm.
The market breadth was negative with only 29% stocks rising on the broader BSE 500 index.