Indian markets fail to maintain initial gains, Nifty holds 5,950

Key equity benchmarks surrendered over half of their opening gains and later traded flat and subdued in late morning trade. Initially markets opened to hit a fresh six-week high in early trade on the back of buying in IT as Infosys posted better-than-expected first quarter earnings. Infosys, country's second-largest software services exporter, reported consolidated net profit at Rs 2,374 crore for the quarter ended June 2013. Sales for the quarter were at Rs 11,267 crore, up 7.7 per cent. The company left FY14 its sales growth guidance in dollar terms unchanged at 6-10 per cent and that turned investors bullish on the counter. After the Infosys results, the market will now shift focus to the June IIP and CPI data for cues on the Reserve Bank of India's rate cut decision at its policy meet this month. Earnings season started off on a positive note as Infosys delivered earnings better-than-expected. The dollar revenue guidance remained unchanged at 6-10 percent and the volume growth has improved to 4.1 percent versus 1.8 percent quarter-on-quarter.

Buying activity gathered momentum after Infosys posted better-than-expected first quarter earnings and gave rupee revenue guidance of 13-17 per cent for 2013-14 fiscal, which mainly influenced the trading sentiment. A strong trend in the Asian region following overnight gains on US markets, further generated buying by participants. Meanwhile, foreign institutional investors (FIIs) bought shares worth a net Rs 638.26 crore on Thursday, 11 July 2013, as per provisional data from the stock exchanges. On the global front, Asian markets exhibiting mixed trend in late morning trade with some of the indices in the region running out of steam with fresh evidence of weakness in the world's second biggest economy China. Back home, the traders were seen piling up positions in IT, Teck and Oil & Gas, while selling was seen in Consumer Durables, Realty and FMCG sector.

In scrip specific developments, shares of information technology (IT) companies edged higher after the sector major Infosys has reported a better-than-expected net profit for the quarter ended June 2013. Shares of Auto sector were trading under pressure after Car sales fell an annual 9% in June as demand continued to suffer due to rising ownership costs and sluggish economic growth. Domestic passenger car sales were 1,39,632 units in June this year from 1,53,450 units in the same month of 2012, with demand dropping for the eighth straight month. 

In scrip specific actions, Infosys jumped over 13 per cent after the company retained its guidance of 6 to 10 per cent growth in revenue in dollar terms for the year ending March 31, 2014, after announcing Q1 June 2013 results before trading hours.  Cipla tanked after the Mumbai-based drug company have come under the scanner of the regulator for failing safety and efficacy tests. Bajaj Auto dropped after the Maharashtra labour minister Hassan Mushrif is likely to call the management next week for a meeting to resolve the workers' strike at its Chakan plant that entered the 17th day today.

Meanwhile, the NSE Nifty and BSE Sensex were trading above the psychological 5,950 and 19,800 levels respectively. The market breadth on BSE was showing negative trend with advances to declines in ratio of 731: 742. The BSE Sensex is currently trading at 19852.77, up by 176.71 points or 0.90% after trading in a range of 19962.78 and 19785.59. There were 14 stocks advancing against 16 declines on the index.The broader indices were trading on mix note; the BSE Mid cap index was down by 0.03% and Small cap index was up by 0.06%.

The top gaining sectoral indices on the BSE were, IT up by 6.42%, Teck up by 4.90%, Oil & Gas up by 0.47%, Capital Goods up by 0.36% and Health Care up by 0.20% while Consumer Durables down by 0.97%, Realty down by 0.64%, FMCG down by 0.49%, Metal down by 0.49% and Auto down by 0.40% were the top losers on the losers on the BSE.

The top gainers on the Sensex were Infosys up by 11.69%, TCS up by 3.81%, Wipro up by 2.38%, Tata Motors up by 1.07% and Sun Pharma up by 0.90%.  On the flip side, Maruti Suzuki was down by 1.80%, Mahindra & Mahindra was down by 1.66%, Coal India was down by 1.09%, Hindalco Inds was down by 1.02% and ITC was down by 1.02% were the top losers on the Sensex.

Meanwhile, Dashing rate cut hopes in the upcoming monetary policy review, the Reserve Bank of India (RBI) governor D Subbarao has said that the central bank will assess growth, inflation and the external situation before taking a view, while it will give priority to controlling inflation, which still remains high. The RBI governor presented an uncertain outlook for the domestic economy and expressed concerns over the deteriorating macro-economic indicators. Meanwhile, with the RBI and government’s collective efforts, the wholesale price index declined to 4.7 percent in May, however, retail inflation still remain at elevated levels of 9.31 percent.  

The sharp depreciation of the rupee has increased upside risks to WPI inflation and may prompt RBI to revise its inflation estimate upwards. The RBI governor has attributed the decline in rupee value to global factors and said that it is difficult to predict when global conditions affecting the rupee would ease. The Rupee has declined by about 9 percent in the past three months and had recently touched an all time low of 61.21 per dollar. Subbarao also cautioned that country’s current account deficit (CAD) is still high, the CAD has widened to a record high at 4.8 percent of GDP in the last fiscal.

The RBI next monetary policy meet will be held on July 30. In the last policy review in June, the central bank left interest rates unchanged on account of declining value of the rupee, fears of inflation and the high CAD..

The CNX Nifty is currently trading at 5,969.90 up by 34.80 points or 0.59% after trading in a range of 6,018.40 and 5,951.15. There were 16 stocks advancing against 34 declines on the index.

The top gainers of the Nifty were Infosys up by 11.05%, TCS up by 3.20%, HCL Tech up by 1.80%, IDFC up by 1.30% and Tata Motors up by 1.23%. On the flip side, UltraTech Cement down by 2.46%, Ranbaxy Laboratories down by 1.87%, IndusInd Bank down by 1.85%, Maruti Suzuki down by 1.71% and M&M down by 1.55% were the major losers on the index.

The Asian equity indices were trading mixed; Jakarta Composite rose 6.23 points or 0.14% to 4,610.46, KLSE Composite increased 2.65 points or 0.15% to 1,783.80, Nikkei 225 gained 43.00 points or 0.27% to 14,511.80 and Taiwan Weighted was up by 11.92 points or 11.92% to 8,187.01.

On the flip side, Shanghai Composite declined 10.64 points or 0.51% to 2,062.35, Hang Seng contracted 69.47 points or 0.32% to 21,368.02, Straits Times dropped 17.30 points or 0.50% to 3,232.68 and Seoul Composite was down by 12.89 points or 0.66% to 1,865.39.