Benchmarks turn red as Infosys cuts guidance

Indian equity benchmarks have pared all their initial gains and entered into red terrain in early deals on Friday after Infosys, India’s second largest software exporter has lowered its revenue guidance (constant currency) for FY17. The company cut its FY17 revenue guidance for second time this year to 8-9 per cent against 10.5-12 forecasted earlier. Dollar revenue guidance was lowered to 7.5-8.5 per cent from 10-11.5 per cent earlier. Sentiments also remained dampened on report that foreign institutional investors were net sellers in equities worth Rs 912 crore on Thursday, as per provisional stock exchange data.

Weakness in global markets too weighed down sentiments with most of the regional counterparts were trading in red at this point of time, while the US markets despite recovering from the day’s low ended in red in the last session.

Back home, losses remained capped as some support came with retail or CPI inflation hitting a 13-month low, aided by lower food prices especially those of vegetables. This is the first time in this financial year that the overall CPI-based inflation has fallen below the Reserve Bank of India’s inflation target of 5 per cent by March 2017. Traders also took some encouragement with reports that the government may seek parliamentary approval to spend about $7.5 billion more on roads, railways and other public programmes over the next five months.

The BSE Sensex is currently trading at 27622.56, down by 20.55 points or 0.07% after trading in a range of 27548.18 and 27763.54. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.26%, while Small cap index was up by 0.22%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.99%, Energy up by 0.85%, Capital Goods up by 0.61%, Industrials up by 0.50% and PSU up by 0.35%, while TECK down by 0.71%, IT down by 0.65%, Consumer Durables down by 0.58%, Metal down by 0.36% and FMCG down by 0.03% were the top losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 1.43%, ONGC up by 1.03%, Reliance Industries up by 1.00%, Larsen & Toubro up by 0.95% and Adani Ports & Special up by 0.89%. On the flip side, Infosys down by 2.55%, Hindustan Unilever down by 1.72%, Lupin down by 1.39%, Bharti Airtel down by 1.03% and HDFC Bank down by 0.39% were the top losers.

Meanwhile, declining for second straight month, annual rate of inflation, based on the consumer prices index (CPI), eased in the month of September at 4.31% as compared to 5.05% in August, mainly on account of a sharp fall in food prices especially those of vegetables. The figure was better than street expectation of 4.53%. This is the first time in this financial year that the overall CPI-based inflation has fallen below the Reserve Bank of India’s inflation target of 5% by March 2017. CPI inflation for urban sector was 3.64% in September, while for rural segment it was 4.96%.

As per the data released by the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, on Base 2012=100, index value for CPI (General) for Rural was 133.3, for Urban was 128.0 and for combined stood at 130.8 for the month of September. Consumer Food Price Index (CFPI) for all India Rural, Urban and Combined for September 2016 stood at 4.43%, 2.88% and 3.88% respectively compared to 4.05%, 3.45% and 3.88% in the month of September 2015.

Food inflation slowed to 3.88% in September from 5.91% in August as prices of vegetables and pulses fell. Inflation in vegetable segment was in the negative, contracted by 7.21 percent. Similarly, the pulses prices were subdued last month as also of egg and milk (and its products). Inflation in case of meat and fish basket was 5.83 percent in September, marginally down over the previous month. However, fruits became dearer in last month over the previous months.

The CNX Nifty is currently trading at 8564.40, down by 8.95 points or 0.10% after trading in a range of 8549.80 and 8600.20. There were 26 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 1.49%, HCL Tech up by 1.24%, Reliance Industries up by 1.10%, Larsen & Toubro up by 1.01% and Adani Ports & Special up by 1.00%. On the flip side, Infosys down by 2.59%, Zee Entertainment down by 2.45%, Hindustan Unilever down by 1.83%, Lupin down by 1.46% and Bharti Airtel down by 1.17% were the top losers.

Asian markets were trading mostly in red; Taiwan Weighted decreased 41.46 points or 0.45% to 9,177.71, Shanghai Composite dropped 16.21 points or 0.53% to 3,045.14, FTSE Bursa Malaysia KLCI slipped 2.87 points or 0.17% to 1,662.15 and Jakarta Composite was down by 0.13 points to 5,340.27. On the flip side, KOSPI Index increased 10.58 points or 0.52% to 2,026.02, Nikkei 225 gained 68.19 points or 0.41% to 16,842.43 and Hang Seng was up by 132.5 points or 0.58% to 23,163.80.