Market may open higher on good Q2 September result by IT bellwether Infosys

The market may open higher on good set of Q2 numbers and on higher EPS and revenue guidance announced by IT bellwether Infosys at the onset of trading session. Positive Asian stocks may further support indices.

As per consolidated result, Infosys's net profit rose 0.9% to Rs 1540 crore on 2.1% rise in total income to Rs 5585 crore in Q2 September 2009 over Q1 June 2009. Infosys said full year ended March 2010 consolidated EPS seen at $2.09 to $2.10, down 6.7-7.1% from year ago. It said full year consolidated revenue seen at $4.6 billion to $4.62 billion, down 1-1.3% from year ago period. It said December quarter consolidated EPS seen at $ 0.5 down 13.8% from year ago. It said December quarter consolidated revenue seen at $ 1.16 billion to $ 1.165 billion from a year ago. It said company added 35 clients in September quarter.

Stock and sector-specific activity may dominate trade in the coming days based on expectations on Q2 September 2009 results. Auto firms are seen reporting strong Q2 results on strong volume growth and on lower input costs. Cement firms too are seen reporting good Q2 numbers on the back of volume growth, higher realisation and decline in costs like imported coal. Metal firms are seen reporting fall in net profit due to a sharp fall in metal prices on year-on-year basis.

Fall in volumes in the commercial property segment and lower realisations in both commercial and residential property segments, will pull earnings of realty firms lower. A sharp surge in equity markets may help treasury gains for some banks.

Strong growth in new subscriber additions will aid topline growth of telecom firms. But falling average revenue per user (ARPU) and revenue per minute due to intense competition will cap bottom line growth.

Finance minister Pranab Mukherjee on Thursday said the rate of economic expansion in the July-September second quarter is not expected to be much faster than the 6.1% pace set in the previous three-month period, but saw acceleration happening starting next month. But with wholesale price inflation expected to top 5% by the end of the fiscal in March 2010, the finance minister said the pursuit of growth would be balanced with the need to keep inflation under check.

Inflation based on the wholesale price index (WPI) rose 0.7% in the year through 26 September 2009, lower than a rise of 0.83% in the year through 19 September 2009, data released by the government today showed. Food article index in the WPI was up sharply at 15.45%. Meanwhile, the government revised upwards inflation for the year through 1 August 2009 to a decline of 0.83% from an estimated fall of 1.74%.

Meanwhile, the water level in India's main reservoirs was at 60 % of capacity on Thursday, unchanged from a week ago and about 10 percent below the 10-year average following a poor monsoon, government data showed on Thursday. Reservoir levels have been below average this year as monsoon rains in the June-September season were 23 % below average, the worst since 1972. Reservoirs start depleting after the June-September monsoon ends as supply of water diminishes after the rainly season.

Most Asian stocks rose today as investors favored companies linked to the global economic recovery over haven assets including utilities shares. The key benchmark indices in South Korea, Taiwan and Hongkong rose by between 0.01% to 1.63%. China's Shanghai Composite rose 3.52% after Chinese stock markets reopened after a long holiday.

Japan's Nikkei rose 0.6%. Japanese machinery orders rose less than estimated in August, barely rebounding from a record low .Orders, an indicator of business investment climbed 0.5 % in August from July, when they fell 9.3 %, the Cabinet Office said today in Tokyo

The US markets advanced on Thursday after jobless claims fell. The Dow gained 61.29 points, or 0.6%, to 9,786.87. The S&P 500 index added 7.90 points, or 0.8%, to 1,065.48, while the Nasdaq Composite index rose 13.60 points, or 0.6%, to 2,123.93. Stocks rose after the number of workers filing new claims for jobless insurance fell to a nine-month low last week down 33,000 to a seasonally adjusted 5, 21,000 last week. In other economic news, wholesalers pared inventories for a 12th straight month in August, while the same store sales gain was the largest in more than a year.

Closer home, a section of the market is, however, concerned that a glut in share sales may suck liquidity from the secondary market. As per reports, 30 companies have filed their draft red herring prospectuses in September 2009 with market regulator Securities & Exchange Board of India (Sebi) for raising funds through initial public offering.

The corporate sector has raised large sums of money through equity and equity related instruments in the past six months or so to either to retire high cost debt or to fund expansion. The supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary market.

As per one report, companies plan to raise over Rs 50,000 crore through initial public offers (IPOs), follow-up public offers, divestment of stake sale in the second half of the current financial year. Reliance Infratel also announced on 22 September 2009, its intention to raise Rs 5,000 crore from the primary market. A number of companies are also in the fray to raise funds by way of qualified institutional placement (QIP), reports suggest.

Divestment of state-run firms by the government may also increase the supply of paper in the market. As per recent reports, the government is planning to announce a blueprint for selling its stake in state-owned firms in the first week of October 2009. The policy is expected to suggest how the government will eventually bring down its stake in public sector companies to 75% over a period of time.

Some caution may prevail on the bourses ahead of assembly polls in three states viz. Maharashtra, Haryana and Arunachal Pradesh on 13 October 2009. The counting of votes will take place on 22 October 2009. Stock exchanges would remain shut on 13 October 2009 in view of the General Assembly Elections.

The key benchmark indices garnered small gains in a choppy trade on Thursday as global stocks surged. The BSE 30-share Sensex rose 36.88 points or 0.22% to 16,843.54 on that day.

As per provisional figures on NSE, foreign funds sold shares worth Rs 376 crore and doimestic funds sold shares worth Rs 20.83 crore on Thursday.