Infosys Q3 result will set the tone for market; IIP data eyed

IT bellwether Infosys's Q3 December 2009 result will set the tone for the market. However, weak Asian stocks may dent sentiment. The government will announce industrial output data for the month of November 2009 today, 12 January 2010. Industrial production recorded a robust 10.3% growth in October 2009.

Infosys will annunce Q3 December 2009 results today, 12 January 2010. Analysts expect weak performance from Infosys in Q3 December 2009 due to a firm rupee and hike in employee salaries. A firm rupee adversely affects operating profit margin of IT firms as the sector derives a lion's share of revenue from exports. Nevertheless, a favourable cross-currency movement will to some extent offset the impact of firm rupee and hike in salary bill. A number of analysts expect Infosys to revise upwards its guidance for the year ending March 2010 amid an improved global business environment. However, a section of the market feels that an adverse cross-currency movement will mean a muted guidance from Infosys for Q4 March 2010.

A total of seven brokerages expect a between 0.79% to 8.65% fall in Infosys' Q3 consolidated net profit as per Indian accounting standards at between Rs 1406.80 crore to Rs 1527.70 crore in Q3 December 2009 over Q2 September 2009. They expect a between 1.29% fall to a rise of 0.37% in revenue at between Rs 5512.90 crore to Rs 5606.10 crore in Q3 December 2009 over Q2 September 2009. It may be recalled that Infosys had raised salaries in October 2009.

Bajaj Auto will also announce its Q3 December 2009 result today.

Meanwhile, the December 2009 export figures will be positive, trade minister Anand Sharma said on Monday. Sharma told a banking summit that higher December 2009 exports are due to a low base. The exports rose an annual 18.2 % in November 2009 to $13.2 billion, the first rise after 13 months of annual decline. Sharma also said that the government would spend $1.5 trillion on infrastructure over the next 10 years. Food prices are likely to come down due to good winter crop prospects and there was no need to import wheat and rice, Sharma said on Monday.

Asian stocks fell on Tuesday, led by banks and mining companies, after China allowed the benchmark money-market rate to increase and Alcoa Inc.'s profits missed analyst estimates.The key benchmark indices in China, Hong Kong, Japan, Indonesia, South Korea, Singapore and Taiwan fell by between 0.08% to 0.73%.

In US markets, the Dow and the S&P 500 closed at fresh 15-month highs as shares of big manufacturers advanced on strong Chinese economic data. The Nasdaq fell as tech shares succumbed to profit-taking. The Dow was up 45.80 points, or 0.4%, to 10,663.99. The S&P 500 index added 2 points, or 0.2%, to 1,146.98, while the Nasdaq was down 4.76 points, or 0.2%, to 2,312.41.

Earnings season kicked off with Alcoa reporting numbers after the bell. The aluminum giant reversed a loss from a year earlier, but still reported earnings that fell well short of Wall Street's estimates.

Closer home, the key benchmark indices ended flat as profit booking in frontline stocks eroded early gains on Monday, 11 January 2010. The BSE 30-share Sensex fell 13.58 points or 0.08% at 17,526.71 on that day.

As per provisional figures on NSE, foreign funds bought shares worth Rs 3041.56 crore and domestic funds bought shares worth Rs 322.46 crore on Monday.