Bleak FY12 guidance from Infosys drags Nifty lower

Sentiments remained bearish for the whole session on Thursday on bleak guidance from Infosys for FY12. Though, Indian market failed to capitalize on the surprisingly better than expected industrial output numbers and it proved to a non-event for the market. However, the market managed to trim some losses in late trade on better than expected Spain’s bond auction. The global cues were not very supportive in the beginning as the US markets closed flat overnight, while, Asian markets snapped the day’s trade in the red amid inflation data in China that failed to meet expectations.

Earlier, bears tightened their grip on technology stocks post Infosys’ weak guidance for FY12 and market made somber start breaching its crucial 4,850 mark. Shares of technology bellwether Infosys was hammered out of shape, tumbling over 8 percent. The street was disappointed with its dollar revenue guidance for FY12 and flattish guidance for the fourth quarter. Though, the second largest software services exporter beat market forecasts with a 33 percent rise in quarterly profit as a weak rupee boosted margins. In the late morning trade, market flied high and recaptured its green terrain supported by upbeat industrial output (IIP) data. IIP for November showed a good growth, improving from a negative 4.7% (revised upwards from -5.1%) in October to 5.9% in November. The growth mainly came in from manufacturing, consumer durables and consumer non-durables. Manufacturing output, which constitutes about 76% of the industrial production, grew an annual 6.6% versus negative 6% in a year ago period. Afterwards, profit booking emerged as investors started expecting weak earnings number by the India Inc. which took the index to its intraday low near its crucial 4,800 mark but, positive opening in European counters supported market to trim some losses. Moreover, better than expected Spain’s bond auction too aided the sentiments and finally, Nifty snapped the day’s trade with a cut of over half a percent.

On the global front, the US markets made a flat closing on Wednesday losing all their early gains on European economy worries while, Asian equities exhibited sluggish trade throughout the day’s trade and snapped the session mostly in the red on Thursday, amid inflation data in China that failed to meet expectations and fears of a possible recession in Europe. However, all the European counterparts were trading in the positive terrain at this point of time. Back home, most of the sectoral indices on the NSE were settled in the green, CNX Media remained the major gainer, up 2.31% followed by CNX PSU Bank up 1.78% and CNX Metal up by 1.18% while CNX IT and CNX Service declined 6.03% and 1.16% respectively in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 2.07% and reached 24.03.

The India VIX witnessed contraction of 2.07% at 24.03 as compared to its previous close of at 24.54 on Wednesday.

The 50-share S&P CNX Nifty lost 29.70 points or 0.61% to settle at 4,831.25.

Nifty January 2012 futures closed at 4,852.20 at a premium of 20.95 points over spot closing of 4,831.25, while Nifty February 2012 futures were at 4,870.00 at a premium of 38.75 points over spot closing. The near month January 2012 derivatives contract expires on Thursday, January 25, 2012. Nifty January futures saw addition of 0.03 million (mn) units taking the total outstanding open interest (OI) to 21.44 mn units.

From the most active contract by contract value, Infosys January 2012 futures were at a premium of 16.70 point at 2606.95 compared with spot closing of 2590.25. The number of contracts traded was 60,939.

HDFC January 2012 futures were at a premium of 1.70 point at 690.85 compared with spot closing of 689.15. The number of contracts traded was 22,196.

SBI’s January 2012 futures were at a discount of 12.10 points at 1762.70 compared with spot closing of 1774.80. The number of contracts traded was 32,845.

Tata Motors January 2012 futures were at a discount of 1.55 point at 207.90 compared with spot closing of 209.45. The number of contracts traded was 12,891.

Axis Bank January 2012 futures were at a discount of 1.30 point at 940.70 compared with spot closing of 942.00. The number of contracts traded was 22,335.

Among Nifty calls, 4900 SP from the January month expiry was the most active call with an addition of 0.06 million.

Among Nifty puts, 4800 SP from the January month expiry was the most active put with contraction of 0.26 million.

The maximum Call OI outstanding for Calls was at 4900 SP (5.79 mn) and that for Puts was at 4800 SP (4.65 mn).

The respective Support and Resistance levels are: Resistance 4865.66 -- Pivot Point 4834.78 -- Support 4800.36.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.34 for January -month contract.

The top five scrips with highest PCR on OI were Union Bank 7.00, CESC 5.20, Lupin 4.00, Dabur 3.60 and Gitanjali 3.01.

Among most active underlying, Infosys witnessed addition of 0.87 million of Open Interest in the January month futures contract followed by SBI which witnessed contraction of 0.08 million of Open Interest in the near month contract. Meanwhile HDFC witnessed contraction of 0.32 million in the January month futures. Also, ICICI Bank witnessed an addition of 0.24 million in Open Interest in the January month contract. Finally, Reliance Industries witnessed a contraction of 0.05 million of Open Interest in the near month futures contract.