If the destination is heaven, why do we scramble to be first in line for hell?
It’s quite a hell out there. Even as the government, regulators and the new board scramble to douse the wildfire at Satyam, its Bangalore-based rival Infosys has come out with its Q3 results.
Infosys has reported a consolidated net profit of Rs16.41bn for the quarter ended December 31, 2008, versus Rs14.32bn in the previous quarter. Consolidated net sales for the reporting quarter are at Rs57.86bn as against Rs54.18bn in the October-December quarter. EPS for the quarter stood at Rs28.63. India Infoline Research had expected Q3 FY09 revenues of Rs57.7bn while the PAT was forecast at Rs17.1bn (pre-exceptional).
No positive surprises were expected from Infosys and it was expected to miss its reported dollar guidance. The company has also trimmed its full-year dollar guidance marginally. The IT sector is facing multiple headwinds, including questions on corporate governance, in the wake of the Satyam controversy. The outlook on the industry remains weak.
The broader market scenario too remains glum in the face of renewed weakness across global markets. The aftershocks from the Satyam quake continue to haunt the market. The surprising improvement in IIP data could not prevent the key indices from slipping further. It may at best provide a temporary relief, as the economy will take time to pick up momentum again. Corporate earnings will continue to be in focus. Politics may become a key factor next month onwards till the end of Lok Sabha polls. Today, we see another cautious opening and no respite in volatility. The bias remains negative.
Key Results Today: CMC and Geojit Financial.
FIIs were net sellers in the cash segment on Monday at Rs5.63bn (provisional) while the local institutions pumped in Rs2.18bn. In the F&O segment, FIIs were net sellers of Rs8.99bn. Foreign funds were net sellers of Rs1.78bn in the cash segment on Friday. Mutual Funds were net sellers at Rs3.49bn on the same day.
US stocks extended last week's declines on Monday, dragged down by concerns about Citigroup's potential deal with Morgan Stanley - and the start of the fourth-quarter earnings reporting period.
Off for a fourth consecutive session, the Dow Jones Industrial Average fell 125.13 points, or 1.5%, to 8,474.05, with 25 of its 30 components ending lower.
Weighing the most on the blue-chip index, Citigroup shares fell 17% with the banking powerhouse reportedly near a deal to combine its brokerage business with Morgan Stanley, whose shares shed 1.4%.
Another Dow laggard, Alcoa shares declined 6.9% after its downgrade by Deutsche Bank to a sell from a hold in the wake of last week's announced cuts in production and employees by the aluminum giant.
Intel reports its results on Thursday, with the chip maker and Wal-Mart among the companies offering bleak forecasts last week.
Shares of technology firm Palm fell nearly 1% after its upgrade to hold by Citibank. Read detailed report.
The S&P 500 Index fell 20.09 points, or 2.3%, to 870.26, with financials fronting the losses that stretched to include all 10 of the index's industry groups, as big declines in real-estate investment trusts and life insurers socked the broader sector. Energy and materials also weighed heavily.
The Nasdaq Composite Index declined 32.8 points, or 2.1%, to 1,538.79.
After the close, Alcoa started off the fourth-quarter reporting period on a less-than-encouraging note. The aluminum maker reported an adjusted loss of 28 cents per share, versus a profit of 36 cents per share a year ago. Analysts thought the aluminum giant would lose 10 cents. The company also reported a bigger-than-expected rise in revenue. A week ago, Alcoa warned that it would lay off 13% of its workforce so as to save costs.
Fourth-quarter earnings are anticipated to be pretty dismal across the board, with companies struggling amid the recession.
Abbott Laboratories said it is buying Advanced Medical Optics for $1.36bn plus debt to expand its eye-care offerings, including laser vision care. Advanced Medical Optics shares gained 143%.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 2.30% from 2.40% on Friday. Yields on the 2-year, 10-year and 30-year Treasurys all hit record lows last month.
Lending rates improved. The 3-month Libor rate fell to 1.16% from 1.26% late Friday, according to Bloomberg.com. Overnight Libor held steady at 0.10%. Libor is a key bank lending rate.
US light crude oil for February delivery fell $3.24 to settle at $37.59 a barrel on the New York Mercantile Exchange.
COMEX gold for February delivery fell $34 to settle at $821 an ounce.
Gasoline prices slipped 0.2 cent to a national average of $1.79 a gallon, according to a survey of credit-card swipes released Monday by motorist group AAA.
European stocks declined on Monday for a fourth straight session, as worries over the prospect for the world economy sent shares of oil-sector companies lower.
The pan-European Dow Jones Stoxx 600 index fell 1.6% to 204.53. Though the oil sector paced the decline, 13 of the 14 component Stoxx sectors finished in the red.
The French CAC-40 index fell 1.6% to 3,246.12, while Germany's DAX 30 index declined 1.3% to 4,719.62, and the UK's FTSE 100 index lost 0.5% to 4,426.19.
It was the third straight trading session where markets ended with losses. Weak global cues coupled with selling witnessed in metals’, power and realty stocks dragged the benchmark indices lower. The BSE benchmark Sensex ended at 9,110 losing 296 points and the NSE Nifty index lost 99 points to close at 2,773.
Among the BSE Sectoral indices BSE Metal index (down 5.7%), BSE Realty index (down 4.4%), BSE PSU index (down 3.6%) and BSE Power index (down 3.6%). Even BSE Mid-cap index (down 2.3%) and BSE Small-Cap index (down 1.7%).
Market breath was negative, 1,598 stocks declined against 838 advances, while, 84 stocks remained unchanged.
Shares of Wipro dropped by over 9% to Rs227 after the company said that in June 2007 the World Bank determined Wipro to be ineligible to contest direct contracts from the World Bank for the period 2007-2011.
The scrip touched an intra-day high of Rs248 and a low of Rs220 and recorded volumes of over 9,00,000 shares on BSE.
Shares of Megasoft declined by half a percent to Rs15.7 after the World Bank barred the company for four years from December 2007. The scrip touched an intra-day high of Rs17.9 and a low of Rs13.3 and recorded volumes of over 1,00,000 shares on BSE.
Provogue India was locked at 5% lower circuit at Rs48.7 after almost 1% of equity changed hands in two transactions. The scrip touched an intra-day high of Rs50.8 and a low of Rs48.7 and recorded volumes of over 5,00,000 shares on BSE.
Shares of Bharat Forge declined by over 8% to Rs81 after reports stated that it would call off its issuance of non-convertible debentures worth Rs4bn due to the weak market conditions. The scrip touched an intra-day high of Rs89 and a low of Rs80 and recorded volumes of over 1,00,000 shares on BSE.
Binani Cement was unable to hold on to their gains and slipped lower by 2% to close at Rs31.7. The stock had rallied on report that the company was planning to invest Rs9bn on expansion. The scrip touched an intra-day high of Rs34 and a low of Rs31 and recorded volumes of over 18,000 shares on BSE.
Overall trend is likely to be choppy amid anxiety about corporate earnings and fragile state of the global economy. Tuesday will be a big day, as IT giant Infosys comes out with its Q3 results. Market expectations remain muted due to the global economic downturn, especially in the US. Overall, the IT sector continues to be out of favour with most investors.