Indian share markets finished the trading week in red dragged by technology stocks, after Infosys revenue outlook and plan to return cash to shareholders fell short of expectations, raising concerns at the start of the earnings reporting season. The sentiments also remained weak on account of global cues.

At the closing bell, the BSE Sensex stood lower by 182 points, while the NSE Nifty finished down 53 points. Meanwhile, the S&P BSE Mid Cap and the S&P BSE Small Cap finished up by 0.1% and 0.2% respectively. Losses were largely seen in capital goods stocks, IT stocks and metal stocks.

BSE Small Cap Index Flying High

Mid and small cap index have returned 31% in FY17, as against nearly 16% given by the S&P BSE Sensex and around 19% by Nifty. Interestingly, many mid and small cap stocks have outperformed the index not only in last one year, but have been on the winning streak from last 5 years.

With earnings not improving from quite some time now, the rise in the stock prices has led to unreasonable valuations. In fact, some of them are in a bubble phase right now. We believe, these stocks are vulnerable if there is any correction in the broader market.

Infosys share price fell as much as 4% to hit a two month low of Rs 927 a share after the company reported profit at Rs 36.03 billion for January-March quarter, degrowth of 2.8% against Rs 37.08 billion in the previous quarter. Revenue fell 0.88% to Rs 171.2 billion compared with Rs 172.73 billion previous quarter. The company also reported weaker than expected constant currency guidance to 6.5-8.5% from 7.2-9.4%.

Asian stock markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.07%, while the Nikkei 225 & the Hang Seng fell 0.68% and 0.21% respectively. European markets are lower today with shares in France off the most. The CAC 40 is down 0.64%, while London’s FTSE 100 is off 0.51% and Germany’s DAX is lower by 0.36%.