Indian markets to get a soft start; Infosys and IIP numbers eyed

The Indian markets suffered cut of about a percent in last session, traders remained concern about the monsoon rains, though it was later announced that the rain deficit has lessened and that helped the markets to recover a bit, the global cues remained bleak and there was nothing from the domestic front that could support the markets, leading them to end near the lows of the day. Today is a big day, IT bellwether Infosys and TCS will be announcing their first quarter numbers, there is general expectation that uncertainty about spending by US and European clients will likely weigh on the earnings of the companies despite a sharp depreciation in rupee. Traders will be watching the guidance of Infosys to gauge the condition of the Indian IT sector, the company in April had forecast 8-10 percent growth for the fiscal year ending March 2013. There is another big event; the government is scheduled to release May IIP output data today and traders will be closely watching the numbers which is expected to be slightly higher and will provide signs of the economy’s health. Today, the telecom stocks are likely to be buzzing as the Empowered Group of Ministers (EGoM) on spectrum will meet.

The US markets extended their fall on Wednesday on gloomy outlook of Fed about the economy, minutes from the Federal Reserve’s last meeting showed policymakers are open to the idea of providing more economic stimulus and few of them opined that the central bank will probably need to take more action to boost the labor market and meet its inflation target. The Asian markets have made a weak start with most of the indices trading lower by half to one and half a percent. The mood is cautious ahead of the Chinese economic growth report that may signal a deeper slowdown in the second largest economy, also Bank of Japan’s policy decision is scheduled later today.

Back home, sentiments once again turned bearish and benchmarks snapped the Wednesday’s trade in red as market participants chose to take some profits off the table after the significant rise in previous session amid subdued global cues. The undertone turned bearish on concerns that global economic slowdown will hurt corporate earnings. The sentiment in the domestic markets too remained cautious ahead of Thursday’s important session, when results of IT giants, TCS and Infosys along with the latest IIP data will take centre stage of investors’ attention. However, the down side remained capped and Nifty managed to hold its crucial 5,300 level at the end on report that the rainfall deficit over the past week has fallen to 23%, a sign that monsoon has arrived at most parts of the country. Though, certain parts of western India is yet to be covered, the Indian Meteorological Department Director, S C Bhan said there is no need to worry because the monsoon is expected to cover the whole country by today. The global cues remained un-supportive. Back home, bourses traded in a tight band throughout the session though in red, led by selling in Auto and FMCG segments. Auto shares witnessed profit taking after recent gains following encouraging sales growth of 8.3% in June compared to the same month last year. Tata Motors was the top loser in the auto pack, down by 2.2%. Other losers include, Maruti Suzuki, Bajaj Auto, Hero Motocorp and Mahindra & Mahindra. Besides, FMCG shares were down on concerns that lower agri output would lead to higher input costs. ITC and Hindustan Unilever were both down over 1% each. However, good set of Q1 FY13 numbers from HDFC also failed to cheer the market’s mood. The non-banking finance company registered 19% rise in April-June quarter net profit at Rs 1001.91 crore as compared to Rs 844.50 crore in the similar quarter a period ago. Bucking the trend, shares of Fertiliser companies, like Zuari Industries, Nagarjuna Fertilizers & Chemicals, Chambal Fertiliser & Chemicals, Rashtriya Chemicals & Fertilizers and Deepak Fertilisers and Petrochemicals Corporation edged higher in the trade on reports that southwest monsoon has picked up pace, and is now on the verge of covering almost the entire country, while, rally in AP papers on delisting buzz also spelled optimism over other paper stocks. Financial Technologies (India) rose after capital market regulator Securities & Exchange Board of India (SEBI) approved MCX Stock Exchange to launch stock trading. Finally, the BSE Sensex lost 129.21 points or 0.73% to settle at 17,489.14, while the S&P CNX Nifty declined by 39.05 points or 0.73% to close at 5,306.30.