Please Refresh for Infosys' Results
In-for gains and pains!
“Once men are caught up in an event, they cease to be afraid. Only the unknown frightens men.”
It’s Infosys, inflation and ICRA listing for today. Time for that event of the year again when the known and the unknown are frightened till the market gives its verdict. Software giant Infosys will unveil its results for the fourth quarter and full fiscal year besides announcing its guidance for the new financial year. As always, the market expects Infosys' report card and even the outlook to be better than expectations. The focus on Infosys and other IT bellwethers is greater this time due to the sharp rise in the rupee versus the dollar and the slowdown in the US. IT shares have been under pressure in the past few weeks amid concerns over the impact of the currency fluctuations on their financials. But, there is a school of thought that believes that the selloff has been overdone and things may not be as bad as anticipated.
India Infoline expects Infosys' Q4 FY07 revenues and profits growing by 6.3% and 5.7% on a sequential basis. For FY08, Infosys is expected to give a guidance of 25-30% growth in topline and 22-25% on the bottomline. The stock was up 2.6% yesterday but is down about 3% in a month. (The results will be included in the Daily Market Strategy. Kindly refresh the link after 9:30 am).
As for the market, it will take its cues, at least initially from the Infosys numbers and the management talk from the company's Bangalore headquarters. Other software shares, especially the likes of TCS and Wipro will move accordingly. The results and the guidance will be out well before the market opens. So, one should hope for the best and prepare for the worst (though we feel there is a very remote chance of any big negative surprise from Infosys). Plus of course, there are a whole host of issues to consider: like the industrial production numbers, inflation data, movements in the currency and money markets and the uncertainty surrounding the next move from the RBI later this month.
Global cues are mixed. US stocks closed higher, while key markets in Asia are flat to marginally up or down. Crude oil prices have crossed the $64 per barrel mark. FIIs were net sellers of Rs1.74bn (provisional) in the cash segment yesterday. In the F&O segment, they offloaded securities worth Rs7.5bn. On Wednesday, foreign funds pumped in Rs1.02bn. Mutual Funds were net buyers of Rs2.89bn on the same day.
Bharat Seats' Board will meet today to recommend bonus issue, stock split and final dividend.
Global cues are mixed. US stocks closed higher, while key markets in Asia are flat to marginally up or down. Crude oil prices have crossed the $64 per barrel mark.
FIIs were net sellers of Rs1.74bn (provisional) in the cash segment yesterday. In the F&O segment, they offloaded securities worth Rs7.5bn. On Wednesday, foreign funds pumped in Rs1.02bn. Mutual Funds were net buyers of Rs2.89bn on the same day.
Shares of credit rating agency ICRA will list on the bourses today. Bharat Seats' Board will meet today to recommend bonus issue, stock split and final dividend.
US stocks jumped on Thursday, with the technology pack leading from the front. Investors brushed aside worries about the day's weak economic news and decided to go in for some bargain hunting.
The Dow added 68.34, or 0.6%, to 12,552.96. The Standard & Poor's 500 Index rose 8.93, or 0.6%, to 1447.80. The Nasdaq Composite Index advanced 21.01, or 0.9%, to 2480.32. For the month, the Dow has gained 1.6%, the S&P 500 has risen by 1.9% and the Nasdaq has climbed 2.4%.
Crude oil futures were up 3% in New York, the biggest gain in two weeks, after the International Energy Agency (IEA) said that OPEC has slashed supplies to a two-year low to cut world stockpiles.
US light crude oil for May delivery rose $1.84 to settle at $63.85 a barrel after the government reported a big drop in gasoline supplies on Wednesday. The front- contract was 18 cents higher at $64.03 a barrel in extended trading in Asia.
COMEX gold for June delivery fell $2 to settle at $679.70 an ounce. Treasury prices slipped, lifting the yield on the benchmark 10-year note to 4.73%, little changed from late on Wednesday. In currency trading, The dollar dropped to a two-year low against the euro.
European shares finished lower. The pan-European Dow Jones Stoxx 600 index declined 0.4% to stand at 380.86. The UK's FTSE 100 closed virtually flat at 6,416.40, while the German DAX Xetra 30 was down 0.1% at 7,142.95 and the French CAC-40 slipped 0.1% to 5,748.94. All three benchmarks had been much lower earlier in the day, but they got a last-minute boost as Wall Street turned positive.
As expected, the European Central Bank held rates steady at 3.75%, as expected, after a quarter-point hike in March.
Asian stocks are headed for a second straight weekly gain.
The Morgan Stanley Capital International Asia-Pacific Index added 0.1% to 147.58 as of 10:50 a.m. in Tokyo. The benchmark is set to gain 0.9% this week, after last week's 1.1% rise.
Markets elsewhere in the region gained, except in South Korea, where the Kospi index fell from a record, China and Taiwan. Thailand was closed for a holiday.
Japan's Nikkei 225 Stock Average advanced 24 points to 17,566 while the Hang Seng in Hong Kong declined 12 points to 20,367. The Kospi in Seoul was down 5 points to 1519 while the Straits Times in Singapore was flat at 3372.
The yen fell to a record low against the euro.
In the emerging markets, the Bovespa in Brazil gained 0.9% to end at 47,346 while the IPC index in Mexico climbed 1.1% to 29,606 and the RTS index in Russia slid 0.9% to 1967.
All eyes on Infosys
Markets ended on a weak note led by selling pressure in the frontline stocks like ICICI Bank, ONGC, Tata Steel, ITC, Tata Motors and BHEL. The Metal, Bank and Oil & Gas stocks were the top losers, with Mid-Cap and the small cap stocks also dragging the key indices to close in red.
However, Technology stocks bucked some negative trend as the index stood firm through out the trading session aiding the key indices with support ahead of Infosys result announcement to be made tomorrow. Finally, the 30-share benchmark Sensex fell 69 points to close at 13113. NSE Nifty was down 32 points to close at 3829.
TCS gained by 0.9% to Rs1200 as reports stated that the company is looking at an overseas listing. The scrip touched an intra-day high of Rs1209 and a low of Rs1172 and recorded volumes of over 9,00,000 shares on NSE.
Lupin advanced 1.9% to Rs626 after the company announced that the U.S. Food and Drug Administration approved the Company's application for Suprax® Cefixime for oral suspension 200mg/5ml. The scrip touched an intra-day high of Rs637 and a low of Rs608 and recorded volumes of over 1,00,000 shares on NSE.
Cigarette major ITC dropped over 2.5% to Rs156. The company signed a new franchise accord for Starwood Brands. The scrip touched an intra-day high of Rs160 and a low of Rs155 and recorded volumes of over 35,00,000 shares on NSE.
VSNL also lost ground towards the end, the scrip was down 1.2% to Rs415. According to reports the company would buy South Africa's Transtel Telecom for Rs1.38bn. The scrip touched an intra-day high of Rs423 and a low of Rs402 and recorded volumes of over 2,00,000 shares on NSE.
IOL Broadband finished lower, the scrip fell 1.5% to Rs426. The company announced that it will launch its e-Learning initiative via Interactive broadband Services very shortly. The scrip touched an intra-day high of Rs438 and a low of Rs421 and recorded volumes of over 1,00,000 shares on NSE.
Technology stocks stood firm in a weak market. Infosys advanced 2.2% to Rs2039 and Satyam Computer gained 1.2% to Rs446. Rolta, i-Flex and Mphasis were among the major gainers.
Profit booking dragged the Metal stocks lower after being in the limelight in couple of trading sessions. Nalco dropped by over 2.7% to Rs241, Sterlite Industries was down 2.1% to Rs496, Hindalco slipped 1.5% to Rs140 and Tata Steel lost 3% to Rs496.
Telecom stocks were on the receiving end. Bharti Airtel was down by 0.7% to Rs769, R Com fell 0.7% to Rs409 and MTNL lost 1% to Rs151.
FMCG stocks also took a beating in today’s session. Marico fell over 2% to Rs59, McDowell was down 1.8% to Rs838, Colgate dropped 1.2% to Rs353 and Tata Tea edged lower by 0.3% to Rs632.
Select Auto stocks also witnessed profit booking. Maruti fell 3% to Rs758, Hero Honda was down 1.7% to Rs629, Tata Motors declined 1.5% to Rs712 and M&M slipped 0.9% to Rs718.
Market volumes:
The turnover on NSE was down by 8.6% to Rs79.84bn. BSE Metal index was the major loser and lost 2.24%. BSE PSU index (down 1.31%), BSE FMCG index (down 1.28%), BSE Bank index (down 1.26) and BSE Oil & Gas index (down 1.04%) were among the other major losers. However, BSE Technology index gained 0.63%.
Volume Toppers:
IFCI, SAIL, Idea, IB Real Estate, Gujarat Ambuja, Tata Syeel, TTML, Hindalco, Parsvnath, NTPC, Indiabulls, Jet Airways, Cairn, HCC, Satyam Computer, SRF and Infosys
Upper Circuit:
Marksons, Radha Madhav, Deccan Aviation, KEW Industries, Atlanta, ACE, Pantaloon Retail, Country Club, HOV Services and Steel Stripes
Stock Futures with Largest Increases in OI:
Parsvnath, Ranbaxy, Aban Offshore, Jet Airways, PFC, Sesa Goa, Tata Power, HDFC Bank, Nagarjuna Construction and SCI.
Stock Futures with Largest Decreases in OI:
Federal Bank, GE Ship, Jaiprakash Associates, JSW Steel, Ultra Tech Cement, Wockhardt, Cairn India, Colgate and Polaris
Brokers Recommendation:
Sasken Communications – Buy from Merrill Lynch
Idea Cellular – Buy from Citigroup
Long Term Investment:
Wockhardt Pharma
Major News Headlines
BILT Q3 profit at Rs640.6mn (up 21.9%) and revenue at Rs5.53bn (up 16.7%)
JSW Steel denies report it may bid for Canada’s Algoma Steel
M&M to consider raising funds on 20th April
Hindustan Zinc raises lead prices by 2.16%
Lupin gets USFDA nod for novel Formulation of Suprax
VSNL to buy South Africa's Transtel Telecom for Rs1.38bn – Reports
Starwood, ITC sign new franchise accord for Starwood Brands
Ranbaxy gets nod to Market Cefprozil Tablets & Cefprozil Powder for Oral Suspension in Canada
Jet Air buys Air Sahara for Rs14.5bn, has already paid Rs5bn to Sahara
IT Services Q4 FY07 Preview
“Not weak as expected”
We expect decent results from sector companies in Q4 FY07 with revenues and profits of our estimated universe growing 7.4% and 6.3% on qoq basis. Infosys FY08 guidance would be the key thing to watch out for, as usual. The excitement and anxiety levels surrounding it are higher this time with Rupee at its 8-year high and concerns over US economic slowdown. We feel that Infosys FY08 guidance will neither please (as for FY07 guidance) nor disappoint (as
for FY06 guidance) in extreme with its growth range being in line with current market expectations. Market seems to have already factored a lower growth guidance yoy from the company.
The Rupee has appreciated sharply over the past 3-6 months with RBI strongly focusing on containing inflation and thereby not being able to actively manage the Re/$ rate as before. At the current Rs42.9/$ (April 5, 2007), Rupee stands near its 8-year high of Rs42.6/$. Rupee has been above Rs43/$ mark since June 11, 1999, till it breached the
same recently on April 4. With inflation control becoming a key imperative for the Government and the central bank, strength in the Rupee is likely to sustain in the short-term.