Infosys' FY 2012 guidance to set the tone; inflation data eyed

IT bellwether Infosys Technologies' Q4 result which will be unveiled before the opening of the market will set the tone for the day's trade. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 42 points at the opening bell. The stock market was closed on Thursday, 14 April 2011, on account of Dr. Ambedkar Jayanti. As per provisional figures foreign institutional investors (FIIs) bought shares worth Rs 25.60 crore on Wednesday, 13 April 2011. Domestic institutional investors (DIIs) sold shares worth Rs 4.80 crore on Wednesday.



The market has been abuzz with talks that Infosys will give encouraging guidance for the year ending March 2012 (FY 2012) given underlying strong demand for offshore outsourcing. Infosys will give annual guidance for FY 2012 at the time of announcing Q4 March 2011 results today. A total of 6 brokerages expects a between 3.3% to 6.7% growth in Infosys' consolidated net profit as per International Financial Reporting Standards at between Rs 1839.40 crore to Rs 1899.20 crore in Q4 March 2011 over Q3 December 2010. The revenue is seen rising 4.2% to 6% at between Rs 7407.80 crore to Rs 7531 crore in Q4 March 2011 over Q3 December 2010.

The near term major trigger for the market is Q4 March 2011 results of India Inc. Investors will scrutinize post-result management commentary to gauge outlook on earnings at a time when rising salaries, raw materials prices and interest rates are pressurizing profit margins of India Inc. High global commodity prices will add to pressure on profit margins of Indian firms.

On the macro front, data of Wholesale Price Index for the month of March 2011 is due today, 15 April 2011. A Capital Market poll pegs a median rate of rise in inflation at 8.3% in March 2011, same as the rate of rise in inflation in February 2011.

A surge in crude oil prices over the past few months has sparked inflation and interest rate worries. The Reserve Bank of India (RBI) is seen raising key short term policy rates by 25 basis points at its annual 2011-2012 monetary policy review on 3 May 2011.

India imports majority of its crude oil requirements and high oil prices have raised concerns about widening current account deficit. High oil prices have also raised concerns about higher oil subsidy bill for the government and its negative impact on the government's fiscal position. US crude futures were up 36 cents or 0.33% at 108.47 a barrel.

Industrial production rose 3.6% in February 2011, lower than market expectations of a 4.8% growth, data released by the government on Monday showed. Manufacturing output, which constitutes about 80% of the industrial production, rose an annual 3.5% in February 2011. January's industrial output annual growth rate was revised upwards to 3.9% from 3.7%.

Good monsoon this year could help ease food inflation and boost rural income. Recent reports indicate that India will receive good rains during the July-September monsoon season this year. The India Meteorological Department (IMD) will give its first official forecast for the June to September monsoon on 19 April 2011.

India is eager to absorb foreign direct investment, Prime Minister Manmohan Singh said on Thursday in the Chinese town of Sanya in a statement at the BRICS summit, which included China, Brazil, Russia and South Africa. Singh also said the Indian economy was well positioned to achieve annual long-term growth of 9% or more. Leaders from Brazil, Russia, India, China and South Africa issued a new call for reform of the dollar-dominated international monetary system and for greater supervision of commodity markets and capital flows, as the so-called Brics nations seek to boost their influence in debates about the global economy.

Most Asian markets edged higher on Friday extending recent sharp rally despite disappointing US data and a likely pickup in Chinese inflation. The key benchmark indices in China, Hong Kong, Indonesia, Singapore and Taiwan rose by between 0.01% to 0.71%. The key benchmark indices in Japan and South Korea fell by between 0.19% to 0.43%.

US markets ended flat on Thursday amid concerns about faltering growth and rising inflation. A US government report showed a surprising jump in US jobless claims, raising some questions among investors about the health of the labor market recovery. The core US Producer Price Index rose faster than expected in March as fuel prices rose strongly, adding to concerns about inflation.