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Infosys' stocks plunge 10% as Sikka resigns, over Rs 22k cr eroded (Roundup)

Mumbai, Aug 18 (IANS) The resignation of a key managerial personnel at global software major Infosys spooked investors and dragged the company’s scrip lower by almost 10 per cent on Friday.

The massive slide in scrip price came after the resignation of Vishal Sikka as the IT major’s Chief Executive Officer and Managing Director. The subsequent fall in stock prices eroded over Rs 22,400 crore in the firm’s market capitalisation (m-cap) at the end of the day’s trade.

At the BSE, the company’s scrip fell by 9.60 per cent or Rs 98.05 to close at Rs 923.10 from its previous close at Rs 1,021.15.

Analysts pointed out that the fall in the company’s scrip was the biggest since early 2013.

“Infosys shares fell as much as 13 per cent, on way to their steepest intra-day percentage loss since April 2013,” Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.

Infosys on Friday announced that Sikka has resigned. “The Board of Directors has accepted the resignation of Vishal Sikka … with immediate effect at its meeting held on Friday,” said the IT major in a statement.

The Board, however, appointed the 50-year-old Sikka as Executive Vice-Chairman and he will hold office until the new CEO and MD takes charge by March 31, 2018.

“Pressure is expected to continue on the stock. There are possibilities of legal tussle in India and abroad as well, which if it materialises does not bode well for the scrip,” Deepak Jasani, Head of Retail Research, HDFC Securities, told IANS.

“However, a buyback announcement soon at high price might calm investors’ nerves and provide a floor to the scrip price.”

In contrast to the day’s movements, on Thursday, shares of Infosys had risen by as much as 5.2 per cent after the company on Wednesday announced that its board would consider a proposal to buy back shares at a meeting later this month.

According to market observers, apart from pulling the company’s stocks down, the news also weighed heavy on the key Indian equity indices, both of which slipped during Friday’s trade session due to heavy sell-off in the IT sector, led by Infosys stocks.

The Nifty50 of the National Stock Exchange (NSE) fell by 66.75 points, or 0.67 per cent, to close at 9,837.40 points, while the 30-scrip Sensitive Index (Sensex) of the BSE closed lower by 270.78 points, or 0.85 per cent, at 31,524.68 points.

–IANS
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