Markets get dragged in early trade on weak guidance of Infosys

Indian markets have made a weak start despite positive global setup, while the US markets surged overnight and the Asian markets made a positive start, the domestic markets came under pressure due to the weaker than expected annual guidance of the IT bellwether Infosys, which kick started the official earnings season of fourth quarter on a subdued note. Though, the company managed to meet the forecast of Q4 and reported a 27.4% rise in quarterly net profit. But what spooked the markets was an extremely conservative annual guidance of the company of just 8-10 percent of revenue growth much lower than the industry body NASSCOM’s projection of 11-14 percent for the whole IT industry. The major IT stocks were alone restricting any gains in the markets. However, the other sectors are performing well and the defensive sector FMCG along with Auto and power has taken the lead.

The BSE Sensex opened at 17,232.56, almost a  100 points lower compared to its previous closing of 17,332.62, and has touched a high and low of 17,389.33 and 17,192.55 respectively. The index is currently trading at 17,334.03, up by 1.41 points or 0.01%. There were 27 stocks advancing against just 3 declines on the index.

The overall market breadth though remains in favour of advances with 65.09% stocks advancing against 30.91% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices were trading higher by 0.64% and 0.35% respectively.

The top gaining sectoral indices on the BSE were, FMCG up by 1.67%, Auto up by 1.52%, Power up by 1.29%, CG up by 1.24% and Bankex up by 1.18%. While IT down by 6.54% and TECk (Technology) down by 4.79% were the only losers.

The top gainers on the Sensex were ITC up by 2.29%, Tata Motors up by 2.14%, Sun Pharma up by 2.11% and Sterlite Inds up by 1.65%.

On the flip side, Infosys down by 9.09%, TCS down by 3.65% and Wipro down by 2.85% were the only losers on the Sensex.

Meanwhile, with sharp revisions in the numbers for January, the IIP number has continued its trend of being an unpredictable number. India’s industrial production grew by a small 4.1% in February, much lower than the expectation of 6.6-6.7%. The January’s IIP number was revised to a shocking 1.1% as compared to the 6.8% put out earlier. With the revision, the actual growth in industrial activity now stands at 3% (m-o-m).

Manufacturing activity, which accounts for about 76% of industrial output in the country, grew by 4% in February compared to 7.5% year-on-year. Mining sector growth, which had been underperforming for a while, has come in at a positive 2%. Electricity production grew at a good 8% against 6.7% a year ago.

The capital goods number was the brightest spot and grew by 10.6% in February as against a contraction of 5.7% in the same month last year. Nonetheless it has been the first positive number in the past 2-3 months. Intermediate goods grew by (-) 0.6%. Mining also posted a positive number of 2.1% after many months of negativity.

The consumer durables have recorded a negative growth of 6.7% year-on-year, with the overall growth in consumer goods being (-) 0.2%. Basic goods registered a growth of 7.5%. Consumer non-durables, which were earlier reported to have grown by 42.1% in January 2012, have now been revised to 11.1%. For the month of February they grew by 5.1%. These numbers have been showing a strengthening trend in the past 2-3 months.

The S&P CNX Nifty opened at 5,255.70; about 20 points lower compared to its previous closing of 5,276.85, and has touched a high and low of 5,299.70 and 5,240.30 respectively.

The index is currently trading at 5,283.55, higher by 6.70 points or 0.13%. There were 45 stocks advancing against just 5 declines on the index.

The top gainers of the Nifty were JP Associates up by 2.51%, Grasim up by 2.19%, RCom up by 2.19%, Siemens up by 2.17% and ITC up by 2.11%.

On the flip side, Infosys down by 9.91%, TCS down by 3.80%, Wipro down by 3.13%, HCL Technology down by 2.12% and Ranbaxy down by 0.41% were the major losers on the index.

Most of the Asian equity indices were trading in the positive terrain; Shanghai Composite was up 4.28 points or 0.18% to 2,355.14, Hang Seng surged by 326.67 points or 1.61% to 20,653.99, KLSE Composite was up 2.34 points or 0.15% to 1,603.61, Nikkei 225 was up 130.41 points or 1.37% to 9,653.05, Straits Times was up 18.88 points or 0.64% to 2,997.35, Taiwan Weighted was up by 115.09 points or 0.52% to 7,779.76 and Seoul Composite was up by 19.45 points or 0.99% to 2,005.94

On the flip side, Jakarta Composite remained the lone loser, down by 0.64 points or 0.02% to 4,138.90.