Infosys...just in line...
A great obstacle to happiness is the expectation of too great a happiness.
It's that day again when all categories of market players eagerly await the report card of Infosys. And, guess what the results are out. Nothing extra-ordinary this time. The bulls are sure to be disappointed and the market, especially the IT pack, will react accordingly. Though its not that bad this time around, the latest numbers are a lot softer than the growth registered in the past two quarters. Infosys has registered a modest 5.8% rise in its net profit for the third quarter at Rs9.83bn versus Rs9.29bn in the previous quarter. Revenues for the reporting quarter are up 5.9% sequentially at Rs36.55bn. The company has also come out with a meagre guidance for the full year.
The bulls, who were expecting Infosys to deliver higher than expected earnings will be a bit disappointed. As a result, the stock as well as IT shares will come under some pressure at the opening bell. The market, which has been weak of late, is also likely to remain so on the back of the subdued Infosys results.
Global cues though are not bad though. Markets in the US and Asia are up though marginally. Oil prices are quoting under $54 per barrel. The opening will be more or less flat to weak. The rest of the trading will depend on the tone of the Infosys management. The undertone anyways remains a little weak owing to lack of fresh buying from FIIs. They were net sellers of Rs7.97bn (provisional) in the cash segment yesterday. In the F&O segment, they offloaded securities worth Rs5.49bn.
The recent selling by the foreign funds doesn't auger well for the market, especially when one considers the stupendous gains of the last couple of years. This set of investors have a huge clout in the market and other investors tend to take their cues from them. Which partly explains the sell-off in the past few sessions after a good start to the new year. A lot is riding on India Inc. So, the results for the Oct-Dec quarter will be key though much of the strength in the Indian economy and corporate profits is already reflected in the stock prices. Companies, especially the large ones, will have to beat market estimates to set the tone for a fresh rally ahead of the budget. The advance tax numbers by the old economy companies have been pretty strong. However, one cannot rely too much on these numbers and will have to wait for the real story.
Other prominent companies announcing their results today include HDFC Bank, Mastek, Hindustan Zinc, Ucal Fuel, KSL & Industries, Jaiprakash Associates and Great Offshore. PBA Infrastructure might gain as the company has bagged a contract worth Rs603mn from the National Highways Authority of India. Moser Baer could be in the thick of things. The company's Home Entertainment division has launched over 101 Tamil titles in Chennai. Nestle India is expected to advance amid reports that the company will distribute extra cash to its shareholders. A Board meeting is scheduled on January 15 to consider the proposal.
Kalyani Steels, BF Utilities and Bharat Forge will be in action amid reports that the Baba Kalyani Group is considering a restructuring. Rama Pulp is likely to do well after a price hike. Titan Industries is another stock one could look at as long-term play. VSNL will attract some attention as the Government is slated to take up the issue of residual stake sale in a Cabinet meeting today. IFCI could continue to rise after selling its 7% stake for Rs7.8bn in the NSE to a group of investors led by NYSE Group.
Market Volumes:
The turnover on NSE was down by 2.6% to Rs85.72bn. BSE Bank index was the major loser and lost 2.45%. BSE PSU index (down 2.44%), BSE Capital Good index (down 2.09%), BSE Oil & Gas index (down 1.28%) and BSE Technology index (down 1.16%) were among the other major losers.
Volume Toppers:
IFCI, Shree Ashtavinayak, Cairn India, R Com, Indiabulls, NTPC, TTML, ITC, Satyam Computer, RIL, SAIL, Polaris, MTNL, DCB, Ashok Leyland, HLL, Unitech and Essar Oil.
Delivery Delight:
Bank of Maharashtra, CESC, Deccan Chronicle, GAIL, Havells, Hindustan Construction Co, Industrial Development Bank Of India, IDFC, MTNL, Patni Computer, Tulip, Wipro and Zee Telefilms.
Lower Circuit Filters:
Ansal Infrastructure, RS Software, KLG Systel, Teledata Informatics, Sadbhav Engineering, Ganesh Housing and Vakrangee Software.
Brokers Recommendations:
ONGC - Buy from CLSA with price target of Rs1025.
Long Term Investment:
India Cements
Major News Headlines:
R Com Board approves raising $1bn in overseas bond
Shasun Chemicals Board to consider Interim Dividend on 10th January, 2007
Bihar Tubes recommends 1:1 bonus issue and interim dividend of 10%
BASF India Q3 sales at Rs1.83bn (up 2.8%), net income at Rs88.3mn (down 24.7%)
Reliance Comm adds 1.4mn subscribers in December
Deccan Chronicle to consider stock split plan on Jan 19
JK Cement to acquire white cement plant in Rajasthan
Bank of Baroda enters into MOU with IIFC