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IT stocks decline

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Last Updated : Apr 22 2014 | 8:55 AM IST

Key benchmark indices hovered in positive terrain in mid-morning trade. The S&P BSE Sensex, was up 56.27 points or 0.3%, up close to 80 points from the day's low and off about 70 points from the day's high. Index heavyweight Reliance Industries (RIL) edged higher in choppy trade. Another index heavyweight and cigarette major also ITC edged higher in volatile trade after hitting record high at the onset of the trading session. The market breadth, indicating the overall health of the market, was positive. Gains in most Asian stocks supported domestic bourses.

Most realty stocks gained as slowing wholesale price inflation has raised rate cut expectations. Capital goods stocks gained on renewed buying. Wipro slumped over 9% after the company said at the time of announcing Q4 results that it expects revenue from IT services business to remain flat on sequential basis in Q1 June 2013. Shares of other IT stocks also declined after Wipro's post result slide.

The market edged higher in early trade on firm Asian stocks. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit their highest level in almost five weeks. The market pared gains after hitting fresh intraday high in morning trade. The market hovered in positive terrain in mid-morning trade.

The market sentiment was boosted by data showing that foreign funds remained net buyers of Indian stocks on Thursday, 18 April 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 940.07 crore on Thursday, 18 April 2013, as per provisional data from the stock exchanges.

The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month April 2013 series to May 2013 series. The May 2013 F&O contracts expire on Thursday, 25 April 2013. The stock market remains shut on Wednesday, 24 April 2013, on account of Mahavir Jayanti.

At 11:20 IST, the S&P BSE Sensex was up 56.27 points or 0.3% to 19,072.73. The index jumped 128.01 points at the day's high of 19,144.47 in morning trade, its highest level since 19 March 2013. The index fell 26.68 points at the day's low of 18,989.78 in early trade.

The CNX Nifty was up 24.50 points or 0.42% to 5,807.60. The index hit a high of 5,833.45 in intraday trade, its highest level since 19 March 2013. The index hit a low of 5,789.80 in intraday trade.

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The market breadth, indicating the overall health of the market, was positive. On BSE, 958 shares advanced and 748 shares declined. A total of 101 shares were unchanged.

Among the 30-share Sensex pack, 17 stocks advanced while rest of them declined.

Index heavyweight Reliance Industries (RIL) rose 0.38% to Rs 784.75. The scrip hit high of Rs 791.40 and a low of Rs 778.65 so far during the day. On the back of a surge in refining margins, RIL's net profit jumped 31.9% to Rs 5589 crore on 1.4% fall in turnover to Rs 86618 crore in Q4 March 2013 over Q4 March 2012. On sequential basis, RIL's net profit rose 1.58% to Rs 5589 crore on 10.06% decline in turnover to Rs 86618 crore in Q4 March 2013 over Q3 December 2012. The company reported Q4 March 2013 results on 16 April 2013.

At the time of announcement of the results, RIL said that the company is working towards next wave of projects to exploit the undeveloped discovered resources in KG-D6 gas field targeted over the net 3-5 years. RIL has submitted an Integrated Block Development Plan (IBDP) for four discoveries in NEC -25 block (D-32, D-40, D-9 and D-10) proposing for a phased manner development. First gas is expected by mid-2019 subject to timely approvals.

Index heavyweight and cigarette major ITC rose 0.02% to Rs 315.25. The stock hit record high of Rs 317.30 in intraday trade today, 22 April 2013. The stock hit low of Rs 312.55 in intraday trade today, 22 April 2013. The government raised the excise duty on cigarettes by about 18% on all cigarettes except cigarettes of length not exceeding 65 mm in Union Budget 2013-14, which was unveiled on 28 February 2013.

Capital goods stocks gained on renewed buying. BEML, Punj Lloyd, ABB, Bhel, Siemens and Thermax rose by 0.19% to 0.79%.

L&T advanced 1.93%. The company on 12 April 2013 said that it would acquire 50% stake in L&T-Komatsu (LTK) held by Komatsu Asia & Pacific Pte, a wholly owned subsidiary of Komatsu, Japan. With this buy-out, LTK will become a wholly owned subsidiary of L&T. LTK will continue to manufacture construction equipment and hydraulic components. Komatsu will be responsible for the production of Komatsu equipment including hydraulic excavators, L&T said in a statement.

Most realty stocks gained as slowing wholesale price inflation has raised rate cut expectations. Purchases of both residential and commercial property are largely driven by finance. D B Realty, HDIL, Unitech and Sobha Developers gained by 0.48% to 4.17%. But, DLF fell 0.54%.

Wipro slumped 9.47% after the company said at the time of announcing Q4 results that it expects revenue from IT services business to remain flat on sequential basis in Q1 June 2013. Wipro expects a between 0.63% fall to a growth of 1.57% in revenue from IT services business at between $1.575 billion to $1.61 billion in Q1 June 2013 over Q4 March 2013. At a post-result conference call, Wipro's management indicated that Q1 for Wipro will be the traditionally weak quarter on account of softness from the India business. The management expects Q2 September 2013 to be better than Q1 June 2013 for the company.

Wipro's IT services revenue rose 0.5% to $1.585 billion in Q4 March 2013 over Q3 December 2012. On year on year basis, IT services revenue rose 3.2% to $1.585 billion in Q4 March 2013 over Q4 March 2012. Wipro announced the fourth quarter results on Friday, 19 April 2013, when the stock market was closed on account of Ram Navmi.

Shares of other IT pivotals also declined after Wipro's post result slide. IT major TCS was down 0.68%. TCS posted good Q4 results last week. Its consolidated net profit rose 1.9% to Rs 3616 crore on 2.2% growth in revenue to Rs 16430 crore in Q4 March 2013 over Q3 December 2012. Net profit jumped 33.6% to Rs 13917 crore on 28.8% growth in revenue to Rs 62989 crore in the year ended 31 March 2013 (FY 2013) over the year ended 31 March 2012 (FY 2012). The company clocked volume growth of 16.8% in FY 2013 over FY 2012.

At a post result conference call held on 17 April 2013, TCS' management said it expects FY 2014 to be better year than FY 2013 and anticipates defending the margins in narrow band despite the headwinds from the wage hikes through other levers.

HCL Technologies fell 2.44% to Rs 717.95. The stock had hit a record high of Rs 809 in intraday trade on 17 April 2013 after the company reported strong Q3 results. Consolidated net profit as per US accounting standards rose 7.8% to Rs 1040 crore on 2.4% growth in revenue at Rs 6425 crore in Q3 March 2013 over Q2 December 2012.

Infosys declined 2.87%. Infosys has forecast a tepid 6% to 10% growth in revenue in both rupee terms and dollar terms for the year ending 31 March 2014 (FY 2014) as the company says that global economic uncertainties remain challenging for the IT industry. The revenue growth outlook is lower than industry body Nasscom's projection of 12% to 14% growth in IT exports in the current fiscal year. Infosys has not given full year earnings guidance this time. Infosys had earlier stopped offering quarterly guidance in July 2012.

The focus of the market is on Q4 results. HDFC Bank announces Q4 results tomorrow, 23 April 2013. Axis Bank will announce its Q4 March 2013 results on 24 April 2013. Jindal Steel & Power declares its Q4 results on 25 April 2013. Hero MotoCorp, ICICI Bank and Maruti Suzuki unveil Q4 results on 26 April 2013. IDFC announces Q4 results on 1 May 2013.

Bharti Airtel and Kotak Mahindra Bank unveil Q4 results on 2 May 2013. ACC and Ambuja Cements announce Q1 March 2013 results on 3 May 2013. Grasim announces Q4 March 2013 results on 4 May 2013. HDFC unveils Q4 results on 8 May 2013. Ranbaxy announces Q1 March 2013 results on the same day. Dr. Reddys Laboratories announces Q4 results on 14 May 2013. Bajaj Auto announces Q4 results on 16 May 2013.

The Reserve Bank of India (RBI) will announce the Monetary Policy Statement 2013-14 on 3 May 2013. The RBI cut its key policy rate viz. the repo rate by 25 basis points to 7.5% after a mid-quarter monetary policy review on 19 March 2013.

Inflation based on the monthly wholesale price index (WPI) eased the lowest level in 40 months at 5.96% in March 2013, and sharply lower than 6.84% in February 2013, data released by the government on 15 April 2013 showed. Non-food manufacturing inflation or core inflation slowed further to 3.41% in March 2013, the data showed.

The India Meteorological Department will issue its initial forecast of 2013 southwest monsoon in this month.

The finance ministry in October 2012 announced a five-year plan to cut fiscal deficit. The government hopes to reduce the fiscal deficit to 3% by March 2017.

Parliament reconvened for the second half of the Budget Session today, 22 April 2013. The government has lined up a number of key bills for consideration and passing during the Budget session of the parliament, which include The Forward Contracts (Regulation) Amendment Bill, 2010, The Pension Fund Regulator and Development Authority Bill, 2011, The Land Acquisition, Rehabilitation and Resettlement Bill, 2011, The National Food Security Bill, 2011 and The Insurance Laws (Amendment) Bill, 2008. The Budget Session of the Parliament ends on 10 May 2013.

Asian stocks rose for the second day in a row on Monday led by Japanese exporters as the yen slid to a four-year low against the US dollar after the Bank of Japan's stimulus policies were unopposed at a Group of 20 meeting. Key benchmark indices in Japan, South Korea, Singapore and Taiwan rose by 0.09% to 1.84%. Key benchmark indices in China, Hong Kong, and Indonesia shed by 0.14% to 0.44%.

Bank of Japan (BOJ) Governor Haruhiko Kuroda emerged from the G-20 meeting saying he was emboldened to press ahead with the campaign to defeat deflation. The central bank holds a policy meeting this week after pledging on 4 April 2013 to double the monetary base in two years.

Trading in US index futures indicated that the Dow could gain 58 points at the opening bell on Monday, 22 April 2013. US stocks rose on Friday as earnings from Google and other companies lifted tech shares.

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First Published: Apr 22 2013 | 11:24 AM IST

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