All progress has resulted from people who took unpopular positions.
The markets are in a shaky position today with global weakness coupled with a downward revision in Infosys' full-year guidance. The IT heavyweight has reported a consolidated net profit of Rs10.79bn for Q1 FY08 versus Rs11.44bn in the previous quarter. However, revenues were flat at Rs37.73bn compared to Rs37.72bn in the January-March quarter. The company has missed its revenue guidance for the first quarter. It had given Q1 revenue guidance of Rs38.96-39.13bn while reporting its full-year results in April. On the bottomline however, Infosys has surpassed its own guidance of Rs10.05bn. The real disappointment is on the outlook. The company says its FY08 revenues will grow by 17-18% year-on-year and earnings per share (EPS) by 13-14%. FY08 EPS is now seen a t Rs78-79.
We have to wait for the Other Income numbers and more importantly listen to what the IT bellwether has to say on its full-year guidance. The IT sector and the market may take their cues from the comments made by Infosys top management on the outlook going forward. At the same time, one has to remember that the market is at an all-time high. Signals from the global markets are not great this morning and oil prices too remain quite high.
The partially-convertible Indian currency closed yesterday at 40.40 per dollar. Higher visa costs and salary hikes, and the IT biggies surely would have had one of their toughest quarters in recent memory. We will have to wait and hear the guidance and outlook going ahead. The bottomlines of most software firms are likely to be hit owing to the 6.5% sequential growth in the rupee over the January to March quarter. Even as the market has recovered from the February-March jolt, IT shares have underperformed by a wide margin. So, in a way the bad news may be factored in. Any untoward development, such as a downward revision in FY08 EPS guidance, could peg them back further. On the flip side, if the "expected bad news" from Infosys is not so bad, there could be a spike up in IT stocks and the market.
Global markets have tumbled, led by renewed concerns over the US housing market. So, we expect a weak opening on the back of the grim global scenario. But, our market will have different issues to grapple with today. All in all, it promises to be an action-packed day.
Disappointing earnings forecasts from the retail sector, renewed concerns about the subprime mortgages and rising crude oil prices sent US stocks tumbling on Tuesday.
Both the Standard & Poor's 500 Index and Nasdaq Composite Index posted their worst decline in a month on growing concerns that the housing slump will hamper earnings as companies start to report second-quarter results this week. Oil's rise above $73 a barrel also dimmed the outlook for profits.
The S&P 500 lost 21.73 points, or 1.4%, to 1510.12. The Dow Jones Industrial Average plunged 148.27 points, or 1.1%, to 13,501.70. The Nasdaq slid 30.86 points, or 1.2%, to 2639.16.
US stocks extended their decline after Federal Reserve Chairman Ben S. Bernanke said inflation expectations remain imperfectly anchored in part because the public doesn't know the central bank's goal for prices. Still, increases in energy prices over the past few years have not led either to persistent inflation or to a recession in contrast to the 1970s, he said in a speech in Cambridge, Massachusetts.
Across the Atlantic, European stocks suffered their biggest drop in a month after Home Depot cut its forecast, copper prices retreated and the dollar fell to a record low against the euro. Europe's Stoxx 600 index lost 1.1% to 394.02.
The German DAX 30 dropped 1.4% to 7,964.76, the French CAC 40 declined 1.4% to 6,019.22 and the UK's FTSE 100 closed down 1.2% at 6,630.90.
In the emerging markets, the Bovespa in Brazil was down nearly 1% at 55,882 while the IPC index in Mexico fell 1.1% to 31,743 and the RTS index in Russia dropped 1.1% to 1977.
Asian stocks fell for the first time in three days after metals prices dropped and earnings reports in the US suggested that demand is cooling in the region's biggest export market.
The Morgan Stanley Capital International Asia-Pacific Index slid 0.7% to 157.58 at 10:28 a.m. in Tokyo, after rising to a record yesterday. All 10 industry groups fell. The Hang Seng in Hong Kong was down 225 points to 22,660.
Japan's Nikkei dropped 1.2% to 18,035.90, set for its biggest decline in two weeks. Exporters were dragged lower after the yen yesterday posted its second- biggest jump this year. Other markets open for trading declined.
Bulls took a breather ahead of the result announcement by the IT bellwether Infosys. After opening on a strong note profit booking in the index heavy weights like Bharti Airtel, SBI, L&T and ACC dragged the markets lower. The broader index i.e. The BSE Mid-Cap and the Small Cap indexes also were under pressure. However, support from the Auto and the IT index saved the markets from a huge fall. Finally, the 30-share Sensex lost 35 points to close at 15009. NSE-50 Nifty slipped 13 points to close at 4406.
GMR Infrastructure spurred by over 6.5% to Rs795 after the company announced that its venture won tender for Sabiha Gokeen Airport at Istanbul, Turkey. The scrip has touched intra-day high of Rs797 and a low of Rs746 and has recorded volumes of over 3,00,000 shares on BSE.
Suzlon declined by 3.3% to Rs1445 amid reports that the government is probing the accounts of its subsidiaries as part of a wider exercise to look into the use of IPO money since 2004. The scrip touched intra-day high of Rs1490 and a low of Rs1435 and recorded volumes of over 3,00,000 shares on NSE.
L&T declined by 1.1% to Rs2389. The company secured order worth Rs5.4bn from IOC. The scrip touched intra-day high of Rs2435 and a low of Rs2380 and recorded volumes of over 8,00,000 shares on NSE.
Tulip IT advanced by 1.5% to Rs805 after the company announced that it has secured ILD License from DOT. The scrip touched intra-day high of Rs842 and a low of Rs797 and recorded volumes of over 2,00,000 shares on NSE.
FMCG stocks were on the receiving end. ITC slipped by 1.3% to Rs153, Colgate was down by 1% to Rs382, Britannia slipped by 2% to Rs1682 and Tata Tea dropped 1% to Rs55. However, HLL gained by 1.6%to Rs198.
Capital Good stocks were on the receiving end as profit booking dragged tem lower. Frontline stock L&T slipped 1.1% to Rs2389, BHEL as down by 1% to Rs1565, ABB declined by 0.8% to Rs1106 and Gammon India dropped 1% to Rs425.
IT stocks ended firm despite the rupee strengthening against the US Dollar currently at Rs40.40 per dollar. Satyam Computer advanced by 1% to Rs497; Infosys gained by 1.3% to Rs2020 and TCS was up by 0.6% to Rs1183.
Auto stocks held on to their gains led by heavy weight Tata Motors as the scrip surged by over 3.8% to Rs743, Maruti was up by 2.3% to 813, M&M gained by 1.01% to Rs787 and Bajaj Auto added 1% to Rs2126.
Cement stocks took the day off after continuously rising for couple of trading sessions. Gujarat Ambuja dropped 2.5% to Rs129, ACC was down by 1.2% to Rs1035 and Grasim declined 1.2% to Rs2727.
Results Today:
Bajaj Auto Finance, Bihar Tubes, Chennai Petro, Country Club, GV Films, iGate Global and Maharashtra Scooters.
Fund Activity:
FIIs were net buyers of Rs5.83bn (provisional) in the cash segment on Monday. On the other hand, local institutions were net sellers at Rs2.07bn. In the F&O segment, FIIs offloaded stocks worth Rs1.43bn on the same day.
On Friday, FIIs poured in Rs8.89bn in the cash segment. Some part of this may still have been due to the ICICI Bank follow-on public offering. Mutual Funds were net sellers of Rs1.91bn.
Major bulk Deals:
Credit Suisse has sold Ankit Metal; Kotak PMS has bought Bihar Tubes; Bear Stearns has picked up Euro Ceramics; Macquarie Bank has sold Hexaware; Citigroup Global has purchased Macmillan; Goldman Sachs has bought Om Metal; HSBC MF has picked up Pritish Nandy Communications; UBS has purchased Tricom India and HSBC Global has bought Welspun India.
Insider Trades:
Spentex Industries Ltd: Schemes of Sundaram BNP Paribas Mutual Fund a) Sundaram BNP Paribas Select Midcap; b) Sundaram BNP Paribas Tax Saver (OE); c) Sundaram BNP Paribas SMILE Fund; d) Sundaram BNP Paribas Rural India Fund has sold in open market 1538273 equity shares of the company on 5th July, 2007.
Lower Circuit:
Anant Raj, Zenith Info and Best & Cromp.
Upper Circuit:
Ram Informatics, Tripex Overseas, Info edge, Tanla, Kothari Products, Ganesh Firgings, Silverline, Bank of
Rajasthan, Ruby Mills and Diamond Cables.
Delivery Delight :( Rising Price & Rising Delivery)
Ashok Leyland, Bajaj Auto, Bank of India, CESC, Cipla, Dr Reddy's, Essar Shipping, Godrej Industries, Nagarjuna Fertilizers, ONGC, SRF and SAIL.
Abnormal Delivery:
Thermax, Kesoram Industries, IGL, Federal Bank, UTI Bank, Sun Pharma Biocon and NTPC.
Major News & Announcements:
S&P cuts rating on Tata Steel to 'BB'
GAIL, Apollo Tyres sign agreement for steam conversion project
HDFC Bank Q1 profit at Rs3.21bn (up 33.7%), total income at Rs26.42bn (up 47%)
Output at six key industries grows 8.7% in May
GMR Infrastructure consortium wins bid for Sabiha Gokeen Airport at Istanbul, Turkey
Tulip IT bags ILD License from DoT
Time Technoplast to discontinue operations at Sahibabad Unit
Reliance Energy would add 15000 MW capacity, says Anil Ambani
L&T gets order worth Rs5.4bn from IOC
HEG to hive of Steel unit
Shasun Chemicals sign technology-licensing Agreement with Lundbeck, Danish Co.
Dollex Industries to consider stocks split on 19th July
Ranbaxy receives final USFDA approval for Amlodipine Besylate Tablets