Strong Infosys results fail to lift market

Key benchmark indices extended losses for the fourth day in a row in what was a highly volatile trading session. Fall in index heavyweight Reliance Industries (RIL), telecom stocks and private sector banking pivotals offset rally in IT stocks on the back of stronger-than-expected Q3 December 2008 results by IT bellwether Infosys Technologies. The BSE 30-share Sensex fell 38.69 points, or 0.42%, to 9,071.36 . Weak global markets weighed on the domestic bourses.

Foreign funds continue to press sales. As per the provisional data released by the stock exchanges after trading hours, foreign funds today, 13 January 2009, sold shares wroth a net Rs 345.78 crore. Domestic funds bought shares worth a net Rs 152.58 crore.

Volatility was intense. After a weak opening, the market surged in early trade boosted by good results from Infosys unveiled before trading hours. After the strong rebound, the market fell sharply to slip into the red in mid-morning trade. It bounced back later. The market pared gains in afternoon trade. A sell-off gripped the market in mid-afternoon trade pulling it day's low. The market bounced back later in choppy trade. But the recovery proved short-lived with the Sensex shedding 1.28% in at about 15:00 IST, before cutting losses.

India's second largest software services exporter Infosys jumped 6.52% to Rs 1232 after it posted a 14.59% rise in net profit to Rs 1641 crore in Q3 December 2008 over Q2 September 2008. The company announced the Q3 December 2008 results before trading hours today, 13 January 2009.

European markets declined today, 13 January 2009, as investors remained worried that big companies might post poor results in the current earnings-reporting season. Key benchmark indices in Germany, France and UK were down by between 1.21% and 1.76%.

Asian markets were mixed. Key benchmark indices in Hong Kong, China and Singapore fell by between 0.81% and 2.17%. However indices in South Korea and Taiwan were up 0.95% and 1.76% respectively.

Stocks fell sharply in Japan. The Nikkei 225 index slumped 4.79% as a stronger yen pressured Toyota Motor and other exporters, with worry about earnings losses at major companies reinforcing fears about the global economy. As per market buzz, Sony Corporation is expected to post heavy operational loss in 2008/09 and Toshiba Corp is expected to post substantial operational loss in the year ending March 2009.

US stocks fell on Monday as concerns about massive credit losses at Citigroup knocked its shares 17% lower, dragging down bank stocks, and on fears of a dismal fourth-quarter earnings season The Dow Jones industrial average plunged 125.21 points, or 1.46%, to 8,473.97. The S&P 500 index declined 20.09 points, or 2.26%, to 870.26, and the Nasdaq composite index slipped 32.80 points, or 2.09%, to 1,538.79.

The BSE 30-share Sensex slipped 38.69 points or 0.42% to 9,071.36. The Sensex opened 67.69 points lower at 9,042.36. The Sensex lost 117.13 points at day's low of 8,992.92 in late trade. At the day's high of 9,261, the Sensex rose 150.95 points in mid-morning trade.

The S&P CNX Nifty fell 28.15 points or 1.02%, at 2744.95. Nifty January 2009 futures were at 2724.40, at a discount of 20.55 points as compared to the spot closing.

The BSE Sensex has lost 1264.57 points or 12.24% in the four trading sessions from 10335.93 on 6 January 2009, hit by accounting scandal at IT major Satyam Computer and on weak global markets. Before the sharp slide, the Sensex had risen 1,007.01 points or 10.79% to 10,335.93 on 6 January 2009 from a recent low of 9,328.92 on 26 December 2008.

The market breadth, indicating the overall health of the market, was weak on BSE, with 1538 shares declining as compared with 881 that rose. A total of 91 shares remained unchanged.

The BSE Mid-Cap index slipped 1.43% at 3,006.41 and the BSE Small-Cap index fell 1.51% at 3,442.35. Both these indices underperformed the Sensex.

The total turnover on BSE amounted to Rs 3,465 crore as compared to Rs 3,212.66 crore on Monday, 12 January 2009. Turnover in NSE's futures & options (F&O) segment was Rs 38,378.33 crore, lower than Rs 44,953.49 crore on Monday, 12 January 2009.

The sectoral indices on BSE displayed mixed trend. The BSE Metal index (down 1.15%), BSE Capital Goods index (down 0.65%), the BSE Oil & Gas index (down 1.78%), the BSE HealthCare index (down 0.75), the BSE PSU index (down 0.73%), the BSE Power index (down 1.11%), the BSE Bankex (down 1.17%), underperformed the Sensex.

The BSE IT index (up 4.71%), BSE Realty index (up 0.13%), BSE Consumer Durables index (up 0.79%), the BSE FMCG index (up 0.16%), the BSE Auto index (down 0.16%), the BSE Teck index (up 0.85%) outperformed the Sensex.

Among the 30-member Sensex pack, 16 gained while the rest slipped.

The strong growth in Infosys' Q3 net profit was mainly due to the depreciation of the rupee against the dollar. The growth in net profit was way above market expectations. The company's revenue rose 6.8% to Rs 5786 crore in Q3 December 2008 over Q2 September 2008. The revenue growth also surpassed market expectations.

On the flip side, Infosys has cut earnings and revenue in dollar terms for the year ending March 2009 (FY 2009). At the same time, it has raised upwards earnings and revenue guidance in rupee terms for FY 2009

Infosys now expects 27.6% growth in earnings per share at Rs 101.30 for FY 2009, revising upwards from Rs 100.51 projected earlier. The company now expects 29.1% to 30.3% growth in revenue to between Rs 21552 crore to Rs 21757 crore for FY 2009, revising upwards from an earlier projected 27.7% to 30.2% growth.

In dollar terms, Infosys now expects 11.1% growth in earnings per American depository receipt to $2.20 for FY 2009, revised downwards from previously projected 12.6% growth. Revenue growth in dollar terms is now expected at 11.8% to 12.8% at between $4.67 billion to $4.71 billion, revised downwards from an earlier estimated 13.1% to 15.2% growth.

Infosys' strong-than-expected Q3 results and a weaker rupee lifted other IT pivotals. India's third largest software services exporter in terms of sales, Wipro recovered sharply from early low to end with 7.32% surge to Rs 244. It was the top gainer from the Sensex pack. The stock had slumped to low of Rs 200 in early trade. Wipro unveils its Q3 December 2008 earnings on 21 January 2009.

The stock had plunged 9.3% on Monday, 12 January 2009 after the company said during market hours it was barred from bidding for contracts from the World Bank until 2011 after it offered employees of the institution shares in its initial public offering. The announcement sent Wipro's ADR tumbling 10.37% on Monday, 12 January 2009.

India's largest software services exporter by sales TCS, too, rebounded from early low of Rs 488 and settled 2.98% higher at Rs 527. TCS unveils its Q3 December 2008 results on 15 January 2009.

However, India's fourth largest software services exporter by sales Satyam Computer Services slumped 8.28% to Rs 31.55 as a quick-fix solutions is unlikely to rescue the firm hit by an estimated Rs 7,000 crore accounting fraud. The stock came off the session's high of Rs 37.

The government-appointed directors on Monday, 12 January 2009 took charge of Satyam and announced that they would appoint a new auditing firm within 48 hours to re-state the accounts. Also, they would immediately begin searching for a new chief executive officer and a chief financial officer.

The government has reportedly offered to throw a financial lifeline to tottering Satyam Computer Services to help it pay salaries to some 53,000 employees and run its operations. The government will consider all aspects, including giving financial support, once it receives firm proposals from the newly-constituted board, Commerce and Industry Minister Kamal Nath said on Monday, 12 January 2009.

Other small and mid-cap IT shares also logged gains taking cues from Infosys's better-than-expected Q3 results. MphasiS (up 0.74%), HCL Technologies (up 0.51%), Sonata Software (up 2.27%), gained.

Rolta India witnessed heightened activity seeing wild swings amid rumours that creditors with whom promoters had pledged their stake have resorted to fire sales in the open market. The stock which all off a sudden tanked as much as 60% in afternoon trade to a 52-week low of Rs 42.40 on BSE later staged a rebound from lower level after the company's chairman K.K. Singh denied rumours that creditor had sold shares pledged by the promoters. The stock ended 18% lower for the day at Rs 87.15 compared to Monday's (12 January 2009) close of Rs 105.90. Volumes in the stock were huge at 2.91 crore shares.

The Indian rupee was weak today, 13 January 2009 at 48.99/49 per dollar from Monday's, 12 January 2009 close of 48.84/85. A weak rupee benefits IT firms as the sector earns most of its revenues from exports.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) lost 1.20% to Rs 1086.10. The stock swung in a wide range of Rs 1085 and Rs 1145 in choppy trade. The Centre will file an affidavit today, 13 January 2009 before the Bombay High Court on the sale of gas from the Krishna-Godavari basin. As per reports, the Centre is likely to state that the price of $4.2 per million British thermal unit (mBtu) will be applicable to all buyers irrespective of whether they are government-owned or private entities.

The Centre's submission could be crucial for National Thermal Power Corporation (NTPC), India's largest power generation firm by sales, which is also locked in a dispute with RIL over the purchase of gas from the KG basin. NTPC shares lost 1% today. RIL had earlier agreed to supply 12 million metric standard cubic meters per day of gas to NTPC at $2.34 per mBtu for 17 years.

India's second largest power generation company by sales Tata Power Company rose 3.93% to Rs 756 on signing a pact with the state government of Gujarat for setting up power plants in the state. The company made this announcement after trading hours on Monday, 12 January 2009.

India's top state-run oil exploration firm by market capitalisation Oil and Natural Gas corporation (ONGC) fell 2.92% to Rs 633.90 and India's top private sector oil exploration firm by market capitalisation Cairn India slipped 7.27% to Rs 152.95, as crude oil prices slumped.

The sharp fall in oil prices which augurs well for state run oil marketing companies, boosted shares of PSU OMCs. HPCL (up 4.27%), BPCL (up 3.70%), and IOC (up 3.45%) rose.

US light, sweet crude for February 2009 delivery fell 34 cents to $37.25 a barrel today, 13 January 2009 extending Monday's, 12 January 2009 sharp fall of 7.94% or $3.24 to $37.59 on worries of global economic recession.

Capital goods heavyweights rose on bargain hunting after a recent steep slide. India's largest engineering & construction company by sales Larsen & Toubro (L&T) gained 0.70% to Rs 700 after sliding 18.63% in the past few trading sessions from Rs 854.40 on 5 January 2009 to Rs 695.15 on 12 January 2009. The stock had tumbled on fears L&T will make huge losses on shares of Satyam it bought before the scandal was unearthed at the IT firm last week. L&T had bought shares in Satyam earlier this month and holds 3.95% stake in the company, L&T chairman A M Naik said in a television interview on Friday, 9 January 2009. The company, which has a small outsourcing unit, had made the investment in Satyam in the hope of forming a strategic alliance, he said.

India's largest power equipment maker by sales Bharat heavy Electricals rose 1.70% to Rs 1367. As per reports, Karnataka Power Corporation will sign 2 separate memorandum of understanding with National Thermal Power Corporation (NTPC) and Bharat Heavy Electricals (Bhel) to set up a 4,000 megawatt thermal power plant at Kudigi in Bijapur district of Karnataka and a wind power project of 500 megawatt at three separate places in the state.

Real estate shares advanced with sentiment boosted by India's largest real estate firm by market capitalisation DLF raising about Rs 1,700 crore in debt at a time of tight liquidity and demand slowdown. DLF advanced 1.39% to Rs 208.60. As per reports, DLF raised funds from state-owned Punjab National Bank and Life Insurance Corporation in December 2008 to repay short-term debt.

Indiabulls Real Estate (up 5.60%), Housing Development & Infrastructure (up 0.95%), and Unitech (up 1.47%), gained.

India's largest private sector steel maker by sales Tata Steel rose 3.15% to Rs 206.60. The stock fell to day's low of Rs 191.20 after international agency Moody's Investor Service downgraded the secured rating of the company's European subsidiary, Tata Steel UK (formerly Corus), because of its decision to reduce production and cut costs in response to declining demand.

India's top copper producer by sales Sterlite Industries climbed up 3.08% to Rs 268. It fell to a low of Rs 253 in early trade tracking an 8.11% plunge in ADR on Monday, 12 January 2009.

India's largest cigarette maker by sales ITC rose 2.03% to Rs 168.20 after a block deal of 6.74 lakh shares was executed on NSE at Rs 170 per share. The block deal constituted 0.02% of the company's equity. ITC will declare its Q3 December 2008 results on 19 January 2009

Telecom pivotals slipped on reports India's much awaited 3G spectrum license auction has been postponed yet again. India's second largest telecom services provider by sales Reliance Communication (RCom), slumped 6.42% to Rs 168.30 and was the top loser from the Sensex pack. India's largest telecom services provider by sales Bharti Airtel lost 2.82% to Rs 607

Private sector banking stocks declined on worries of rising bad loans in a slowing economy. India's largest private sector bank by net profit ICICI Bank fell 2.51% to Rs 427 after its ADR fell 7.31% on Monday, 12 January 2009. India's second largest private sector bank by net profit HDFC Bank shed 1.65% to Rs 987.65 after its ADR slipped 5.04% on Monday, 12 January 2009.

However India's biggest bank in terms of total assets and branch network, State Bank of India rose 1.40% to Rs 1173. The stock had slipped 4.86% yesterday after the bank's Chairman O.P. Bhatt during trading hours said the bank has an exposure of about Rs 500 crore to firms with the Maytas tag. Maytas Infra and Maytas Properties are owned by the family of Satyam's Raju. Bhatt said that the exposure was fully collateralised with no problem as of now. He said the bank was reviewing the exposure.

Dewan Housing Finance Corporation rose 4.82% to Rs 82.55 on reports it is set to acquire IDBI Home Finance for close to Rs 311 crore.

India's top truck maker by sales Tata Motors lost 3.24% to Rs 156.65 after its ADR lost 7.56% on Monday, 12 January 2009.

Ashok Leyland fell 0.34% to Rs 14.85 despite bagging an export order worth $10.5 million from Honduras Armed Forces (HAF) for supply of 139 vehicles.

Reliance Industries was the top traded counter on BSE with turnover of Rs 244.60 crore followed by Rolta (Rs 217.40 crore), Reliance Capital (Rs 174 crore), Infosys (Rs 146.20 crore) and DLF (Rs 145.35 crore).

Satyam Computer Services topped volumes on BSE clocking volumes of 3.30 crore shares followed by Rolta (2.90 crore), Reliance Natural Resources (1.80 crore), Unitech (1.35 crore) and Suzlon Energy (1.05 crore).

Fertilizers & Chemicals Travancore shed 1.56% to Rs 18.90. The company reported a net profit of Rs 5.28 crore in Q3 December 2008 as compared to a net loss of Rs 54.46 crore in Q3 December 2007. The company announced the result after the market hours on 12 January 2009.

Hindustan Construction Company surged 2.36% to Rs 47.75 on signing a pact with the state government of Gujarat, involving total investment worth Rs 40,000 crore, for a township project. The company made this announcement before trading hours today, 13 January 2009.

Jubilant Organosys gained 4.60% to Rs 141 after the company said its unit has signed a partnership agreement with US based BioLeap in the area of drug discovery.