Infosys' disappointing FY14 guidance drag benchmarks lower in early trade

Indian equity indices have made a gap down start on Friday with both the frontline gauges tumbling below their crucial 5,550 (Nifty) and 18,300 (Sensex) levels, dragged down by disappointing fourth quarter earnings from Infosys and lower growth guidance for FY14. The company, on consolidated basis, reported a rise of 3.37% in its net profit at Rs 2,394 crore in quarter under review as compared to Rs 2,316 crore in same period previous year. Total income of the company increased 17.09% to Rs 11,128 crore as against Rs 9,504 crore in a year ago period. Meanwhile, the company in its FY14 guidance has said that consolidated revenues are expected to grow between 6-10%, much below than Nasscom’s 12-14% industry growth expectations for the current fiscal.

On the global front, the US markets extended their gains on Thursday, though the tech-heavy Nasdaq underperformed its counterparts but overall sentiment was boosted by the report of Labor Department, showing that initial jobless claims fell by more than expected in the week ended April 6th while, Asian markets were exhibiting mixed trend in Friday’s morning deals. The Bank of Japan’s liquidity injections and Wall Street’s record-high close overnight continued to underpin investor confidence. However, the gains remain capped as signs of tensions in the Korean peninsula dented the investors’ sentiments.

Back home, market-men remained sidelines ahead of monthly industrial production (IIP) and CPI numbers to be announced later in the day. On the sectoral front, fast moving consumer goods witnessed the maximum gain in trade followed by healthcare and oil and gas while, software, technology and consumer durables remained the top losers on the BSE sectoral space. The broader indices too were struggling to get some traction while, the market breadth on the BSE was negative; there were 492 shares on the gaining side against 768 shares on the losing side while 49 shares remain unchanged.

The BSE Sensex opened at 18,275.66; about 266 points lower compared to its previous closing of 18,542.20, and has touched a high and a low of 18,337.91 and 18,193.18 respectively.

The index is currently trading at 18,278.20, down by 264.00 points or 1.42%. There were 23 stocks advancing against 7 declines on the index.

The overall market breadth has made a weak start with 31.74% stocks advancing against 64.82% declines. The broader indices were trading in-line with benchmarks; the BSE Mid cap and Small cap indices were down by 0.24% and 0.44% respectively. 

The top gaining sectoral indices on the BSE were, FMCG up by 1.38%, Health Care up by 0.57%, Oil & Gas up by 0.41%, Power up by 0.36% and PSU up by 0.30% while, IT down by 9.47%, Teck down by 7.52%, Consumer Durables down by 0.91%, Realty down by 0.58% and Capital Goods down by 0.58% were the top losers on the sectoral index.

The top gainers on the Sensex were ITC up by 1.98%, BHEL up by 1.34%, Cipla up by 1.25%, Hindustan Unilever up by 1.06% and Bajaj Auto up by 0.97%.

On the flip side, Infosys was down by 17.24%, Wipro was down by 4.97%, TCS was down by 2.75%, Tata Motors was down by 1.01% and L&T was down by 0.43% were the top losers on the Sensex.

Meanwhile, for a smooth roll-out of Direct Benefit Transfer (DBT) scheme in the 78 more districts by May 31, the finance ministry has asked all the PSU banks to complete infrastructure network for direct transfers of cash subsidy to the final consumers under the scheme.

The proposed scheme will be extended all over the country through ‘Aadhaar’ the unique identification number and will have their bank accounts linked to that. Further, Aadhaar details received from the district administration or department must be seeded promptly without delay and uploaded on the NPCI Mapper at the end of every day.

As per the finance ministry, the state-owned banks would be required to strengthen the banking infrastructure by May 31 for the proper implementation of second phase of DBT, particularly in the areas that are not covered by the banking services. The ministry has also asked the banks to undertake focused programme for issuance of debit cards, to the beneficiaries under the various schemes, so that they are able to draw the benefit as per their convenience.

Moreover, the banks have also been directed to install and operationalise ATMs at all branches in the identified 121 districts by June 30. Earlier on January 1, the government launched its ambitious DBT programme and a total of 43 districts in 16 states have been identified for the first round of DBT that will cover 26 social welfare schemes.    

The primary aim of this Direct Benefit Transfer program is to bring transparency and terminate corruption from distribution of funds sponsored by the government. In DBT, benefit or subsidy will be directly transferred to the citizens living below poverty line and curbing the subsidy to those who don't require it. The government is also working out propositions to roll out direct transfers of cash subsidy for cooking gas (LPG) to the final consumers under the DBT.

The CNX Nifty opened at 5,520.70; about 73 points lower as compared to its previous closing of 5,594.00, and has touched a high and a low of 5,544.50 and 5,494.90 respectively.

The index is currently trading at 5,535.05, down by 58.95 points or 1.05%. There were 36 stocks advancing against 13 declines and one stock remains unchanged on the index.

The top gainers of the Nifty were Lupin up by 2.42%, ITC up by 2.02%, Asian Paints up by 1.92%, BPCL up by 1.86% and BHELup by 1.60%.

On the flip side, Infosys down by 17.09%, TCS down by 3.05%, HCL Tech down by 2.16%, Tata Motors down by 1.10% and IndusInd Bank down by 1.10%, were the major losers on the index.

Asian equity indices were trading in mixed trend; Shanghai Composite rose 0.47 points or 0.02% to 2,220.02, Hang Seng jumped 38.23 points or 0.17% to 22,139.50, Jakarta Composite increased 14.51 points or 0.29% to 4,938.77 and Straits Times was up by 2.55 points or 0.08% to 3,311.35.

On the flip side, KLSE Composite declined 5.16 points or 0.30% to 1,701.88, Nikkei 225 dropped 117.55 points or 0.87% to 13,431.61, KOSPI Composite slipped 9.97 points or 0.51% to 1,939.83 and Taiwan Weighted was down by 32.17 points or 0.41% to 7,825.81.