A range bound movement was witnessed as key benchmark indices hovered in negative zone in mid-morning trade. At 11:21 IST, the barometer index, the S&P BSE Sensex, was down 143.56 points or 0.51% at 27,798.55. The Nifty 50 index was currently down 36.70 points or 0.43% at 8,528.30. A post result setback in index heavyweight and IT major Infosys weighed on the two key benchmark indices. Infosys tumbled after the company reduced revenue growth guidance in constant currency terms at the time of announcing its Q1 June 2016 results during trading hours. The Sensex failed to hold the psychologically important 28,000 mark after moving past that mark in early trade.
The Sensex dropped 199.85 points or 0.72% at the day's low of 27,742.26 in morning trade, its lowest level since 12 July 2016. The barometer index rose 106.59 points or 0.38% at the day's high of 28,048.70 in early trade, its highest level since 17 August 2015. The Nifty fell 52.25 points or 0.61% at the day's low of 8,512.75 in morning trade. The index gained 29.80 points or 0.35% at the day's high of 8,594.80 in early trade, its highest level since 10 August 2015.
In overseas stock markets, Asian shares rose after Wall Street struck another record high overnight. Chinese stocks witnessed a mixed trend after the release of a slew of economic reports. In mainland China, the Shanghai Composite index was currently off 0.16%. In Hong Kong, the Hang Seng index was currently up 0.17%. China's economy grew 6.7% in the second quarter from a year earlier, steady from the first quarter and slightly better than expected as the government stepped up efforts to stabilise growth in the world's second-largest economy. The National Bureau of Statistics also said today, 15 July 2016, that industrial output rose 6.2% in June from a year earlier, accelerating from 6% growth in May, while fixed-asset investment climbed 9% year on year for the January-June period, compared with an increase of 9.6% in the year's first five months. Retail sales grew 10.6% in June from a year earlier, accelerating from a 10% increase in May. The industrial-production and retail figures were better than expected while the investment figure was below expectation.
US stocks extended their run into the record books as the Dow Jones Industrial Average and the S&P 500 notched record closing highs yesterday, 14 July 2016. Stronger-than-expected results from large financial institutions, including J.P. Morgan Chase, as well as upbeat economic powered the climb.
In Europe, the Bank of England (BOE) left key rates unchanged at 0.5% after a monetary policy review yesterday, 14 July 2016. The Monetary Policy Committee (MPC) voted unanimously to maintain the stock of purchased assets financed by the issuance of central bank reserves at 375 billion. BOE said in a statement that the MPC is committed to taking whatever action is needed to support growth and to return inflation to the target over an appropriate horizon. To that end, most members of the committee expect monetary policy to be loosened at the next MPC meeting in August. Committee members made initial assessments of the impact of UK's vote to leave the European Union on demand, supply and the exchange rate. According to the initial assessment, economic activity is likely to weaken in the near term. The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round.
Closer home, the market breadth indicating the overall health of the market was negative. On BSE, 1,329 shares fell and 898 shares rose. A total of 127 shares were unchanged. The BSE Mid-Cap index was currently up 0.41%, outperforming the Sensex. The BSE Small-Cap index was currently off 0.32%. The fall in this index was lower than the Sensex's decline in percentage terms.
IT major and index heavyweight Infosys slumped after the company trimmed its revenue growth guidance for the year ending 31 March 2017 (FY 2017) at the time of announcing its Q1 June 2016 results during trading hours. The stock was off 8.86%. In constant currency terms, the company has forecast 10.5%-12% growth in revenue for FY 2017. At the time of announcement of Q4 March 2016 and FY 2016 results, the company had forecast 11.5%-13.5% growth in revenue for FY 2017 in constant currency terms.
On a consolidated basis, Infosys' net profit fell 4.5% to Rs 3436 crore on 1.4% growth in revenue to Rs 16782 crore in Q1 June 2016 over Q4 March 2016. The results are as per International Financial Reporting Standards (IFRS). Infosys CEO Vishal Sikka said in a statement that the company witnessed unanticipated headwinds in discretionary spending in consulting services and package implementations as well as slower project ramp-ups in large deals, resulting in a lower than expected growth in Q1 June 2016.
TCS fell 2.42% after consolidated net profit as per International Financial Reporting Standards (IFRS) fell 0.4% to Rs 6317 crore on 3% rise in revenue to Rs 29305 crore in Q1 June 2016 over Q4 March 2016. Operating income fell 0.9% to Rs 7347 crore in Q1 June 2016 over Q4 March 2016. The result was announced after market hours yesterday, 14 July 2016.
IT stocks declined after IT major Infosys trimmed its revenue growth guidance for the year ending 31 March 2017 (FY 2017) at the time of announcing its Q1 June 2016 results. Wipro (down 1.23%), HCL Technologies (down 1.1%), Oracle Financial Services Software (down 0.42%), Tech Mahindra (down 2.57%), Polaris Persistent Systems (down 0.93%) and Hexaware Technologies (down 1.52%) fell. MphasiS rose 0.6%.
Telecom stocks fell. MTNL (down 0.87%), Tata Teleservices (Maharashtra) (down 1.42%) and Reliance Communications (down 0.88%) declined. Bharti Airtel (up 1.09%) and Idea Cellular (up 1.21%) rose.
Shares of Bharti Infratel rose 0.86%. Bharti Infratel is a provider of tower and related infrastructure and is a unit of Bharti Airtel.
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