Markets slide after firm opening; financials drag

The markets have slumped after a positive opening due to weakness in financial stocks. Infosys is, however, up 3%

The markets have slumped after a positive opening due to weakness in financial stocks. Markets had started the day's proceedings on a positive note, with Infosys heralding the result season season with a decent set of numbers. However, the gains were short-lived as weakness on the financial counters negated the  gains on the IT counters. The Sensex has shaved off 161 points at 22,468 and the 50-unit CNX Nifty has lost 37 points at 6,738. The broader market space is also in doldrums, with the BSE mid-cap index shedding 26 pointat 7312 and the small-cap index losing 13 points at 7509. Index bellweather, Infosys is however bucking the nervousness on the Street to go strong at Rs 3360, up 3.5%. 

 

Infosys, India's second largest software services exporter, beat the street by reporting fourth quarter (January-March) net profit at Rs 2,992 crore, up 4 percent compared to previous quarter in FY14.  The consolidated revenue came in at Rs 12,875 crore. EBIT came in at Rs 3281 crore, and in terms of margin it was 25.48%. Revenue in dollar terms came in at $2,092 million. Infosys gave the dollar revenue guidance for FY15 in the range of 7-9%.

 

Analysts, on an average, had expected profit of Rs 2,789 crore for the quarter. The company had reported a profit of Rs 2,875 crore in the December 2013 quarter.

 

Total consolidated revenues, however, declined by 1.2% at Rs 12,875 crore in March quarter against Rs 13,026 crore in December quarter, Infosys said in a statement. The Q4 operating margins expanded 50bps sequentially to 25.5%, it added.

 

Meanwhile, the company has guided for a revenue growth of 7%-9% for the financial year 2014-15 (FY15). The board has recommended a final dividend of Rs 43 per equity share for the financial ended March 31, 2014.

 

Infosys has hit a high of Rs 3,371.80 and a low of Rs 3,325 so far during the day. The stock had hit a record high of Rs 3,847.20 on 3 March 2014 and a 52-week low of Rs 2,190 on 29 April 2013. The stock had underperformed the market over the past one month till 11 April 2014, sliding 11.90% compared with the Sensex's 3.68% rise. The scrip had also underperformed the market in past one quarter, sliding 8.82% as against Sensex's 9.01% rise.

 

Experts say the Nifty could find support at 6,740, while the resistance could be at 6,820. “Upside acceleration is likely once the Nifty crosses the 6,820 resistance,” said a note by HDFC Securities.

 

The Nifty has closed in red on Friday which indicated that there was some profit booking by the bulls. Last week, the BSE Sensex shut shop 1.21 per cent higher while the Nifty rose 1.22 per cent for the week ended April 11, 2014. 

 

The markets are likely to remain volatile in a truncated week. Macroeconomic data, trend in investment by foreign institutional investors (FIIs), movement of rupee against the dollar and crude oil price movement hold key. On daily charts Nifty witnessed some supply pressure around 6800 levels in last two trading session.

 

Global Markets

 

The Asian shares are muted on Tuesday morning after upbeat U.S. data helped Wall Street bounce from a sharp selloff in recent days. The MSCI's broadest index of Asia-Pacific shares outside Japan is 0.2% up, edging back towards an 11-month high of 486.70 hit last week. Japan's Nikkei has risen 0.8% after skidding to a six-month low on Monday.

 

Overnight, U.S. stocks closed higher on Monday as Citigroup's earnings and strong retail sales gave investors reasons to buy equities despite a resurgence of geopolitical uncertainties. The Dow Jones industrial average shot up 0.91%, to end at 16,173. The Standard & Poor's 500 Index gained 0.82%, to finish at 1,831. The Nasdaq Composite Index advanced 0.57%, to close at 4,023.

 

Investors are cautious, however, as tensions in Ukraine tempered demand for riskier assets. Geopolitical concerns returned to the forefront after pro-Russian separatists ignored an ultimatum to leave occupied government buildings in eastern Ukraine as a threatened military offensive by government forces failed to materialize. Rebels in the town of Slaviansk issued a bold call for Russian President Vladimir Putin to help them.

 

In the currency space, the dollar is firm versus major currencies, after US retail sales data signaled a brighter outlook for the US economy. 

 

The financials are having a rough ride; HDFC has slid by 2.6% at Rs 893, HDFC Bank has lost 1.8% at Rs 724, Axis Bank has lost 1.4% at Rs 1473 and SBI has lost 1.4% at Rs 1966.

 

On the other hand, the positive sentiment surrounding Infosys has rubbed onto the other IT counters; TCS has gained 1% at Rs 2185 and Wipro has added 0.9% at Rs 573. 

 

In the broader market space, United Spirits and United Breweries Holdings have surged after Diageo Plc has made an offer to acquire an additional stake in United Spirits at price of Rs 3,030. United Spirits has rallied 15% to Rs 2,941, while UB Holdings has surged nearly 20% to Rs 33.35 on the Bombay Stock Exchange.

 

The market breadth is marginally negative. Out of 1367 stocks traded on the BSE, there are 642 advancing stocks as against 661 declines.

 

 

 

 

 

 

 

 

 

 

In the currency space, the dollar is firm versus major currencies, after US retail sales data signaled a brighter outlook for the US economy. 

 

The financials are having a rough ride; HDFC has slid by 2.6% at Rs 893, HDFC Bank has lost 1.8% at Rs 724, Axis Bank has lost 1.4% at Rs 1473 and SBI has lost 1.4% at Rs 1966.

 

The positive sentiment surrounding Infosys has rubbed onto the other IT counters; TCS      has gained 1% at Rs 2185 and Wipro has added 0.9% at Rs 573.

 

The market breadth is marginally negative. Out of 1367 stocks traded on the BSE, there are 642 advancing stocks as against 661 declines.