Bleak Infosys FY13 outlook drag benchmarks lower; August IIP remains non-event

Distressed markets witnessed denting on Friday’s trade with benchmarks ending the session with a cut of over half a percent, weighed down majorly by software and technology stocks after IT bellwether Infosys reported disappointing FY13 outlook. The combination of domestic as well as global factors led to the selling across the board and the domestic gauges snapped the session below their crucial 5,700 (Nifty) and 18,700 (Sensex) levels. The IT major also remained the top loser, pummeled nearly six percent due to lower than expected revenue guidance for the current fiscal 2013 in dollar terms. However, the company, on the consolidated basis, posted a rise of 24.29% in its net profit at Rs 2369.00 crore for the quarter ended September 30, 2012 as compared to Rs 1906.00 crore for the same quarter in the previous year.

August industrial output, which despite registering better than expected pace of growth, also contributed to the carnage, as it dimmed hopes of rate cut by world’s most aggressive central bank in its upcoming monetary policy review on October 30. Industrial Production for August came in at 2.7 percent, which was higher than expectations of 0.94 percent while July output was revised to -0.2 percent from 0.1 percent (provisional) earlier. The monthly growth rates of the three sectors that constitute the IIP - Mining, Manufacturing and Electricity - for the month stood at 2.0%, 2.9% and 1.9%, respectively. Meanwhile, India’s consumer price inflation decelerated slightly in September, but still remained uncomfortably high, maintaining pressure on the central bank to continue with a tight monetary policy. Consumer prices rose 9.73% in September from a year earlier, compared with a 10.03% increase in August.

Bleak global cues also added to the downside of the markets. European markets were lower in early trade on Friday tracking weak moves in Asia as investors remain worried about the lingering uncertainty over Spain’s debt crisis. Moreover, Asian counters ended the session on a mixed note with Japan’s Nikkei ending at a new 2-month low on Friday weighed down by selling pressure in SoftBank.

Back home, the sentiments also got bashed by rate sensitive as realty, auto and banking all edged lower by about half a percent as rise in August IIP dimmed the rate cut hopes by RBI in its next meeting on Oct 30. However, the losses remain capped as shares of sugar stocks like Bajaj Hindusthan, Balrampur Chini, Dhampur Sugar and Shree Renuka gained after a government panel recommended scrapping of state control on the marketing of sugar in the country. Some amount of support also came in after HDFC bank reported better than expected Q2 numbers. It reported rise of 30.07% in its net profit at Rs 1559.98 crore for the quarter under review while, gross non-performing assets (NPAs) declined to 0.91% in the July-September quarter as against 1.00% in the same quarter previous year while net NPAs remained same at 0.2%.

The NSE’s 50-share broadly followed index Nifty fell by over thirty points to end below its psychological 5,700 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex tumbled by about one hundred and thirty points to finish below the psychological 18,700 mark. However, the broader markets outperformed the benchmarks through the session and ended the trade slightly in the green.

The overall volumes stood at over Rs 1.10 lakh crore, which remained on the lower side as compared to that on Thursday. The market breadth remained in favor of declines as there were 1,370 shares on the gaining side against 1,516 shares on the losing side while 134 shares remain unchanged.

Finally, the BSE Sensex lost 129.57 points or 0.69% to settle at 18,675.18 while the S&P CNX Nifty declined by 32.00 points or 0.56% to end at 5,676.05.

The BSE Sensex touched a high and a low of 18,844.35 and 18,638.34, respectively. The BSE Mid-cap and Small-cap indices were up by 0.08% and 0.03%, respectively.

Gail India up 1.16%, Cipla up 1.01%, HDFC Bank up 0.94%, TCS up 0.66% and Hindustan Unilever up 0.60% were the major gainers on the Sensex. On the flip side, Infosys down 5.36%, Bharti Airtel down 2.58%, BHEL down 2.46%, Wipro down 2.01% and Hero MotoCorp down 1.61% were the major losers on the index.

The top gainers on the BSE sectoral space were Consumer Durables (CD) up 0.60%, Health Care (HC) up 0.49% and FMCG up 0.21%, while IT down 2.59%, TECk down 2.26%, Realty down 0.88%, Auto down 0.73% and Capital Goods (CG) down 0.43% were top losers on the BSE sectoral space.

Meanwhile, India has imposed absolute anti-dumping duty on non-radial bias tyres that are used in buses and trucks from China and Thailand. This duty will be applicable for a period of 5 years.

The shift follows approval from the Designated Authority in the Commerce Ministry to continue anti-dumping duty on imports of non-radial bias tyres from Thailand and China. The anti-dumping duty will also be applicable on certain tubes and flaps.

In the case of imports from Thailand, the anti-dumping duty has been pegged at $0.86/kg, while from China pegged at $1.31/kg. The tyres produced by Hangzhou Zhongce Rubber Co., in China, the anti-dumping duty pegged at $1.12/kg.

 The S&P CNX Nifty touched a high and a low of 5,725.00 and 5,659.35 respectively.

The top gainers on the Nifty were ACC up 3.92%, Lupin up 2.89%, Ambuja Cement up 2.80%, JP Associates up 1.43% and Grasim up 1.37%.

The top losers on the index were Infosys down 5.65%, BHEL down 2.64%, Bharti Airtel down 2.53%, Wipro down 2.32% and IDFC down 2.27%.

European markets were trading in red. France’s CAC 40 down 0.18%, Germany’s DAX down 0.21% and Britain’s FTSE 100 down by 0.15%.

Asian markets closed on mixed note as earlier gains post foreboding US jobs figures and hopes for upcoming Chinese economic data were countervail by global economic worries. Japan’s Nikkei extended losses with drop in telecom giant, Softbank and Fast Retailing, a company behind the Uniqlo chain of clothing shops. However, China's Shanghai Composite ended higher, despite cautions ahead of trade and inflation numbers due to be released on Saturday and Monday. Snapping a four-session losing streak, Kospi index ended marginally up on Friday, while Korean stocks closed almost unaltered.