Disappointing Infosys numbers continue to weigh on the market

After staging modest recovery, benchmark equity indices have again taken the turn for the worst on account of severe selling pressure in Information Technology stocks, after poor showing from IT bellwether, Infosys, on its weak FY14 revenue guidance and poor Q4 sales figures. Markets staged some recovery following better than expected macro-economic reports, suggested some recovery in Indian economy. On macro front, snapping five consecutive monthly rise, annual rate of inflation, based on the consumer prices index (CPI), eased in the month of March at 10.39%, with index of industrial production (IIP) too beating the estimates by showing a growth figure of 0.6% for the month of March. 

Negative global set up, also added to the angst, which pressed sales on every rise. Benchmark 30 share index, Sensex is trading below the crucial support level of 18300, with colossal loss of over 300 points, while Nifty, receded further from the psychological 5550 level, with loss of over 50 points. Broader indices too were trading in red, though with lesser intensity.

On the global front, paring the biggest weekly advance since September, Asian pacific shares fell from the highest level in 20 months as investors locked in recent gains. Meanwhile, snapping four days rally, European shares opened lower on Friday, before a report that may show American retail sales stagnated and as euro-area finance ministers prepared to meet in Dublin.

Closer home, sectorally IT, Realty and Capital Goods counters are the worst performers of the session, while Fast Moving Consumer Goods, Oil & Gas and Power counters are the top gainers, Meanwhile, Telecom stocks viz, Bharti Airtel and Idea Cellular, continue to trade weak after Supreme Court's 3G order. The overall market breadth on BSE is in the favour of declines which thumped advances in the ratio of 1217:743, while 115 shares remained unchanged.

The BSE Sensex is currently trading at 18224.36, down by 317.84 points or 1.71% after trading in a range of 18337.91 and 18193.18. There were 15 stocks advancing against 15 declines on the index.

The broader indices were trading in red; the BSE Mid cap index and Small cap indices were trading lower by 0.31% and 0.51% respectively.

The top gaining sectoral indices on the BSE were, FMCG up by 1.90%, Oil & Gas up by 0.52%, Power up by 0.41%, PSU up by 0.29% and Health Care up by 0.26% while, IT down by 10.05%, Teck down by 8.13%, Realty down by 0.85%, Capital Goods down by 0.54% and Consumer Durables down by 0.42% were the top losers on the BSE.

The top gainers on the Sensex were ITC up by 2.87%, Hindustan Unilever up by 1.38%, Tata Power up by 1.22%, BHEL up by 1.20% and Hindalco Industries up by 1.05%.On the flip side, Infosys down by 19.11%, Wipro down by 4.76%, TCS down by 1.91%, Sterlite Industries down by 1.30% and L&T down by 1.05% were the top losers on the Sensex.

Meanwhile, in a positive surprise, India's annual industrial output growth measured by index of industrial production (IIP) grew by 0.6% at 176.2 for the month of February 2013 although lower than growth of 2.4%, higher than the street expectation of a negative figure. The cumulative growth for the period April-February 2012-13 over the corresponding period of the previous year stood at 0.9%.

The bounce in the industrial output came mainly due to contribution from Consumer goods sector, which turned positive for the first time in a year at 0.5%. Additionally, staging growth for second consecutive month, the manufacturing sector, which constitutes about 75.53% of industrial production, grew by 2.2% from a year earlier. However, Mining and electricity sector, contracted by -8.1% and -3.2% respectively. The cumulative growth in the three sectors during April-February 2012-13 over the corresponding period of 2011-12 has been (-) 2.5%, 1.0% and 4.0% respectively.

Meanwhile, Capital goods output, a key investment indicator, registered robust 9.5% growth against -1.8% in January. Consumer goods grew by 0.5%, driven by growth of Consumer durables and Consumer non-durables at -2.7% and 2.9% respectively.

However, in a disappointment, the output in the country's eight key infrastructure industries, also known as the core sector and accounting for almost 40% of factory production, contracted by an annual 2.5 percent in February after January’s 3.9% rise. Production in five of eight core sector industries declined owing to which the infrastructure output contracted for the first time since the new series started in April 2005.

Factory output came in better than street estimates for second consecutive month, but this was more on account of sharp rise in Capital Goods output. Notably, before the surprise rise in January, industrial output had contracted in seven of the previous 10 months, thereby highlighting that this could be mere consolidation at lower levels.  The CNX Nifty is currently trading at 5,526.60, down by 67.40 points or 1.20% after trading in a range of 5,544.50 and 5,494.90. There were 31 stocks advancing against 19 declines on the index.

The top gainers of the Nifty were Asian Paints up by 2.97%, ITC up by 2.91%, Lupin up by 2.20%, BPCL up by 1.90% and Hindustan Unilever up by 1.47%.

On the flip side, Infosys down by 18.96%, TCS down by 1.99%, HCL Tech down by 1.91%, Jindal Steel and L&T were down by 1.06%, were the major losers on the index.

Most Asian equity indices were trading in red; Shanghai Composite down 0.64%, Hang Seng down by 0.16%, KLSE Composite declined 0.43%, Nikkei 225 dropped 0.47%, KOSPI Composite slipped 1.31%, Taiwan Weighted was down by 0.46% and Straits Times was slumped 0.33%. On the flip side, Jakarta Composite increased 0.32%

European shares got off to negative start; with CAC 40 declining by 0.35%, FTSE100 losing 0.25% and DAX shedding 0.56%.