Key benchmark indices trimmed gains after opening on a firm note triggered by IT major Infosys forecasting revenue growth for the year ending 31 March 2017 (FY 2017) that would exceed growth for the software services industry. At 9:25 IST, the barometer index, the S&P BSE Sensex was up 33.09 points or 0.13% at 25,659.84. The gains for the Nifty 50 index were lower than the Sensex's gains in percentage terms. The Nifty was currently up 2.50 points or 0.03% at 7,852.95.
The market breadth indicating the overall health of the market was negative. On BSE, 735 shares declined and 646 shares rose. A total of 83 shares were unchanged. The BSE Mid-Cap index was currently up 0.11%. The BSE Small-Cap index was currently up 0.02%. Both these indices underperformed the Sensex.
In overseas markets, Asian markets dropped after major oil producers failed to reach an agreement to curtail production in Doha over the weekend. In Japan, the Nikkei 225 index was currently off 2.85% after a powerful second earthquake struck southern Japan on Saturday, 16 April 2016. US markets closed marginally lower on Friday, 15 April 2016.
Shares of IT major Infosys jumped 6.54% after the company forecast revenue growth for the year ending 31 March 2017 (FY 2017) that would exceed growth for the software services industry. At the time of announcement of Q4 March 2016 results on Friday, 15 April 2016, when the stock market was closed for a holiday, Infosys said that it expects revenue growth of 11.8%-13.8% for FY 2017 in US dollar terms. In constant currency terms, the company has forecast 11.5%-13.5% growth in revenue for FY 2017. Infosys' revenue growth forecast is higher than 10% to 12% growth for the IT outsourcing sector for FY 2017 forecast by IT industry body National Association of Software and Services Companies (Nasscom) in February this year. Infosys has forecast 12.7%-14.7% growth in revenue in rupee terms for FY 2017 based on rupee dollar exchange rate of 66.26 as on 31 March 2016. The rupee dollar exchange rate stood at 66.64 on 13 April 2016.
After the strong revenue growth guidance for FY 2017, Infosys' ADR jumped 8.4% to settle at $20 on the New York Stock Exchange on Friday, 15 April 2016. Infosys' consolidated net profit rose 3.8% to Rs 3597 crore on 4.1% growth in revenue to Rs 16550 crore in Q4 March 2016 over Q3 December 2015. The results are as per International Financial Reporting Standards (IFRS).
Infosys said that the employee attrition reduced further in Q4 March 2016. On annualized basis, the employee attrition rate declined to 17.3% in Q4 March 2016 from 18.1% in Q3 December 2015.
IT major TCS fell 1.94% ahead of its its Q4 March 2016 results today, 18 April 2016. TCS announced on Saturday, 16 April 2016 that it had received a jury verdict in a recently completed jury trial in a lawsuit filed by Epic Systems in the court of Western District Madison, Wisconsin. It is expected that the trial judgement will be entered in the case in the next six to eight weeks, following which the parties can file an appeal within 30 days after the judgement is filed, TCS said. The jury's verdict on liability and damages was unexpected as the company believes they are unsupported by the evidence presented during the trial, TCS said. The company added that it did not misuse or derive any benefit from downloaded documents from Epic System's user-web portal. TCS said it plans to defend its position vigorously in appeals to higher courts. The company said it appreciates the trial judge's announcement from the bench that he is almost certain he will reduce the damages award. The jury verdict will not have any impact on the company's Q4 March 2016 and FY 2016 financial results, TCS said.
Reliance Industries (RIL) shed 0.84% after the company announced before market hours today, 18 April 2016 that the SEZ refinery of the company is planning to shut down one crude distillation unit for routine maintenance & inspection (M&I) activities from 1 May 2016, for about 3 weeks. The other three crude distillation units including all secondary processing units are expected to operate at normal throughput at Jamnagar refinery complex, RIL said. The company said it does not anticipate any impact on its commercial commitments.
Bharat Heavy Electricals (Bhel) fell 1.09%. The company announced that it has bagged an order worth Rs 282 crore from NTPC for setting up a 50 megawatts (MW) solar photovoltaic (SPV) power plant in Mandsaur in Madhya Pradesh on engineering, procurement and construction (EPC) basis. The project is scheduled for completion in twelve months. The announcement was made on Thursday, 14 April 2016, when the stock market was closed for a holiday.
Mahindra & Mahindra (M&M) declined 1.13%. M&M expects vehicle prices to rise as the automobile industry adheres to various safety and emission norms announced by the regulator. According to M&M, complying with safety norms would mean an average cost of Rs 25,000 to Rs 30,000 per vehicle and complying with BSVI norms would increase the price by around Rs 1.50 lakh (approximate cost increase of Rs 90,000 plus taxes) based on current technologies for complying with these norms. M&M's Executive Director and Group President, Auto and Farm Equipment Sectors & Member of the Group Executive Board Dr. Pawan Goenka said in an interaction with auto industry analysts on 13 April 2016 that the capex requirement for M&M for BSVI compliance would be around Rs 500 crore. There will be additional capex to be incurred at the vendors end, he said.
Goenka said that the company is working on a range of gasoline engine options. The company intends to launch gasoline options for its sports utility vehicles Scorpio and XUV500 within the next 12 months. KUV100 has received good response from customers. Currently, KUV100 has a waiting period of 6-8 weeks. The gasoline variant of KUV100 has received good response and contributes to about 45% of KUV100 sales.
Goenka expects the ongoing momentum in M&M's exports growth to continue with the neighboring markets as well as Africa and South American markets.
With regard to the tractors business, Goenka said that the company is very well poised to take advantage of the expected growth in the tractors industry in India with a strong launch of its 'Yuvo' series (5 tractor models) in the mainstream segment of 30-45 hp which accounts for 80% of the tractors market size. The Yuvo has been developed after significant understanding of customer insights, he said.
ITC rose 1.75% after the company on Friday, 15 April 2016, announced that consequent upon a High Court order passed in favour of the company, the company will soon resume manufacture of cigarettes in its factories. Early this month, ITC announced temporary closure of manufacturing operations at all its cigarette factories in India with effect from 1 April 2016 due to lack of clarity on the quantum of mandatory pictorial health warning on cigarette packages.
Among macro economic data, the inflation based on wholesale price index (WPI) for the month of March 2016 is scheduled to be released by the government today, 18 April 2016. WPI inflation stood at negative 0.91% in February 2016 as compared to a reading of negative 0.9% (provisional) in January 2016.
Reserve Bank of India (RBI) Governor Raghuram Rajan said in an interview to a newspaper in Washington on Thursday, 14 April 2016, that if the monsoon is good, if inflation continues on a downward path and if there is continuing progress on food management reforms that reduce costs it will provide room for the RBI to further reduce policy interest rate. Recently, the weather office forecast good rains during the June-September 2016 southwest monsoon season. The RBI cut its benchmark policy rate viz. the repo rate by 25 basis points to 6.5% from 6.75% after a scheduled policy review on 5 April 2016. At that time, Rajan had indicated in his monetary policy statement that the RBI might cut the repo rate further in the coming months if macroeconomic and financial developments provide room for further rate cut. The RBI next undertakes monetary policy review on 7 June 2016.
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