Weakness continues weighed by IT shares

Stock markets continue to remain weak, shrugging of better-than-expected November IIP data, on selling pressure in software technology shares after the weak revenue guidance by Infosys.

At 1250 hours, the Sensex was down 153 points at 16,022 levels and the S&P CNX Nifty was at 4,823, lower by 38 points.

On the macro economic front, the industrial production growth came in at 5.9% for November, 2011, after witnessing a contraction of 4.74% in the previous month.

Further, food inflation for the week ended December 31, 2011 came in at -2.9% compared to -3.36% during the previous week.

Software technology shares fell after Infosys cut its dollar revenue guidance for fiscal 2012 and guided a flat dollar revenue growth for the fourth quarter (Jan-Mar). The software major’s Oct-Dec surged up 24.5% to Rs 2,372 crore quarter-on-quarter- better than analysts' expectations. But the company cut its FY12 dollar revenue guidance to 16.4% as against earlier guidance of 17.1-19.1%. The BSE IT index has shed 5.4% or 317 points at 5,515 levels.

According to Sanjeev Hota, AVP Research with Sharekhan, "Infosys has not been able to achieve a growth higher than 3 per cent and we were expecting around 4 per cent growth in volume."

"Going forward, given the current cautious statements coming from the Infosys’ management in the backdrop of macro uncertainty, the guidance for FY13 could also be disappointing," adds Hota.

Among the other sectoral indices, Teck, oil & gas, capital goods and realty stocks are also under a mild selling pressure.

At the same time, Power index is the top sectoral gainer, up 0.8% to 1,944 levels. Bankex, Metal, PSU, Consumer Durables and FMCG indices are also trading on a firm note.

Infosys is the top Sensex loser down 7.15% to Rs 2,624. TCS another stalwart of the IT industry is also trading lower by nearly 5% at Rs 1,083.

Among other Sensex shares, Wipro, Reliance Industries, Larsen & Toubro, Mahindra & Mahindra, ONGC, Hindustan Unilever, Hero MotoCorp, HDFC, Tata Motors and Sun Pharma have are also among the notable laggards.

On the other hand, State Bank of India is the top gainer, up 1.6% to Rs 1,754. Gail India, Hindalco, Tata Steel, Coal India, NTPC, Sterlite Industries, Tata Power and Bharti Airtel are also among the gainers.

Shares of electric equipment makers - ABB, Siemens and Crompton Greaves have rallied 2-5% after electricity sectors reported 14.6% year-on-year growth in November 2011. The sector had reported 5.5% growth in October.

Titagarh Wagons has gained 2% to Rs 416 after the company plans to foray into shipbuilding, reports sources. The company is likely to pick a stake in the newly floated firm Titagarh Marine Ltd.

The broader markets are trading on a flat note. The BSE mid-cap index is up 7 points at 5,513 and the small-cap index is lower by a point at 6,073 levels.

The overall market breadth is neutral as 1,260 stocks are declining while 1,212 stocks are advancing.