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Indian shares log worst week in over two months as IT stocks slump

FILE PHOTO: Broker reacts while trading at his computer terminal at a stock brokerage firm in Mumbai

By Bharath Rajeswaran and Akansha Victor

BENGALURU (Reuters) -Indian shares slid on Friday to log their worst week in over two months as IT stocks tumbled as HCL Technologies' warning of a potential slowdown in client spending in the industry's key U.S. market.

The Nifty 50 index closed down 0.61% at 18,496.60, while the S&P BSE Sensex ended 0.62% lower at 62,181.67, with both indexes posting their sharpest drops in a week.

The Nifty lost 1.07% for the week, while the Sensex fell 1.09%, logging their biggest one-week slides since the week-ended Sept. 30.

IT stocks, the second most influential sectoral group on the Nifty, tumbled 3.14% on the day and more than 6% for the week. The weekly drop was the steepest since mid-September when IT stocks fell in tandem with U.S tech stocks.

The decline on the day was sparked by HCL Chief Executive C. Vijayakumar's warning that revenue growth for the current financial year would be at the lower end of its guidance due to furloughs and a drop in spending in some sectors.

"The commentary raised doubts over the pace of recovery in I.T. space", said Narendra Solanki, head of equity research (fundamental) at Anand Rathi Shares & Stock Brokers.

The top losers in the Nifty 50 were IT stocks.

Analysts said investors would also remain cautious ahead of key announcements on the closely-watched U.S. consumer price inflation data and the Federal Reserve's monetary policy decision next week.

Earlier, the markets had opened higher as crude prices hovered near one-year lows and on hopes of a global demand revival due to China's easing of strict COVID-19 restrictions.

But the mood quickly soured after HCL's warning, which weighed on almost all sectors. The PSU bank index snapped a six-day rally, losing over 2.5%.

Paytm was the rare bright spot, jumping 7.16% after saying it would consider a share buyback proposal.

(Reporting by Bharath Rajeswaran and Akansha Victor in Bengaluru; Editing by Savio D'Souza)