IT Vs Infosys results disappoint?
Waiting is a trap. There will always be reasons to wait. The truth is, there are only two things in life, reasons and results, and reasons simply don't count.
We've had enough of reasons for gain and now comes the pain. Infosys results are lower than expectations. We expect a negative opening on the back of poor numbers from Infosys and expectations of similar earnings reports from other software biggies.
IT stocks have been laggards this year in contrast to the sharp rally witnessed in the old economy pack and the market as a whole. Having said that there has been some rally in these shares over the past few days. Any further bad news could lead to a fall. Even otherwise, these stocks may be ripe for a correction along with the market.
Software stocks fell out of favour with investors after the rupee started accelerating versus the dollar. The inevitable happened, and most IT firms, barring TCS to an extent, announced poor Q1 results and weak outlook. So, not much is expected this quarter either, though Q2 may be somewhat better than Q1. Sequential (QoQ) growth is not expected to be too exciting.
What remains to be seen is whether IT companies announce any improvement in the guidance for the whole year. But, with the rupee rise continuing unabated one may be asking too much from software firms. Infosys has announced a modest increase in its guidance for for the full year. Will it Infosys be able to increase it's billing rates in January when most deals are renegotiated? That is the question now.
Coming to the broader market, there is no major change in the sentiment. The dollar deluge continues into the booming stock market. The political storm has blown over, for the time being at least. We expect a positive opening on the back of a firm trend across Asia. The movement later in the day will hinge on Infosys results and the management talk though there is no major threat to the overall momentum.
DLF's Board of Directors will meet today to consider fund raising plans, global acquisitions, participation into the proposed IPO of DLF Offices Trust in Singapore and investment in various development projects in India and abroad.
Among the companies announcing their results are Mastek, Idea Cellular, Abhishek Industries, Container Corp. and Solar Explosives.
Eicher Motors and Ashok Leyland are expected to be in the limelight amid reports that the Hinduja Group flagship is interested in acquiring its smaller rival.
The Dow Jones Industrial Average slipped on Wednesday, a day after hitting an all-time high. But, the Nasdaq Composite index managed to buck the trend, ending at its highest level in more than six years.
Alcoa declined the most in a week after sales slipped 3.2%. Monsanto fell after its loss widened on lower-than-expected sales. Boeing posted its steepest drop since August after saying it needs six more months to finish building its new 787 Dreamliners.
The Standard & Poor's 500 Index lost 3 points, or 0.2%, to 1,562.47 after climbing to a record yesterday. The Dow fell 86 points, or 0.6%, to 14,078.69. The Nasdaq added 8 points, or 0.3%, to 2,811.61.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by a narrow margin on volume of 1.16 billion shares. On the Nasdaq, decliners beat advancers 8 to 7 on volume of 1.96 billion shares.
In economic news, a government report showed that August wholesale inventories rose a smaller-than-expected 0.1% after rising 0.2% in July.
Treasury prices fell, raising the yield on the benchmark 10-year note to 4.65% from 4.64% late on Tuesday. COMEX gold for December delivery rose $2.90 to settle at $746 an ounce.
US light crude oil for November delivery rose $1.04 to settle at $81.30 a barrel on the New York Mercantile Exchange.
European shares closed higher as strength in the mining sector offset some weakness from oil and gas companies. The pan-European Dow Jones Stoxx 600 index gained 0.1% at 388.23. The UK's FTSE 100 closed up 0.2% at 6,633.00 and the German DAX 30 rose 0.1% to 7,986.57. The French CAC-40 dipped 0.4% to 5,838.49.
In the emerging markets, the Bovespa in Brazil was down 0.6% at 63,197 while the IPC index in Mexico gained 1% at 32,129. The RTS index in Russia added 0.1% at 2143 and the ISE National-30 index in Turkey fell 0.9% to 73,206.
Asian markets rose this morning, led by raw-materials producers and shipping companies, on speculation that global demand for commodities will be able to weather a slowdown in the US economy.
The Nikkei in Tokyo advanced 35 points to 17,212 while the Hang Seng in Hong Kong climbed 270 points to 28,839. The Kospi in Seoul added 3 points to 2044 and the Straits Times in Singapore gained 60 points at 3874.
The Morgan Stanley Capital International Asia Pacific Index rose 0.1% to 167.98 as of 10:49 a.m. in Tokyo, after a two-day, 1.3% rally that lifted the index to a record. Indices of shipping lines and miners were the biggest contributors to the measure's advance today.
The Philippines was the only market to decline in the region.
MARKET...
All eyes on Infosys
Another mile stone was achieved as yet again Indian bourses recorded a new all time high close. After hitting the 18,700 mark key indices faced stiff resistance as selling pressure in the FMCG and select Consumer Durable stocks dragged the benchmark index below the 18,700 mark.
Among the BSE sectoral indices, BSE Capita Good index (up 4.3%), BSE IT index (up 3.2%) and BSE Metal index (up 2.5%). However, BSE FMCG index lost 0.20%.
Finally, BSE 30-share benchmark Sensex ended 378 points higher to close at 18,658. NSE Nifty jumped 114 points to close at 5,441.
SBI surged by over 2% to Rs1923 after reports stated that the company would likely get approval for right issue. The scrip touched an intra-day high of Rs1957 and a low of Rs1860 and recorded volumes of over 9,00,000 shares on NSE.
Tata Motors gained by 1.3% to Rs806 after reports stated that the company is firming up plans to launch new cars in 2007-08 and is likely to unveil a new multi-utility vehicle during 2007 and the company has also announced hike in commercial vehicle prices. The scrip touched an intra-day high of Rs818 and a low of Rs773 and recorded volumes of over 11,00,000 shares on NSE.
Lupin gained by 0.5% to Rs588 after the company announced that it acquired Japan based Co. Kyowa for $60mn. The scrip touched an intra-day high of Rs605 and a low of Rs580 and recorded volumes of over 4,00,000 shares on NSE.
Sun Pharma edged lower by 0.5% to Rs920. The company announced that they have secured US FDA approval to market Trileptal tablets. The scrip touched an intra-day high of Rs941 and a low of Rs918 and recorded volumes of over 2,00,000 shares on NSE.
Metal stocks were among the major gainers. Jindal Steel rallied by over 10% to Rs7414, Hindalco advanced by 3. 7% to Rs170, SAIL was up by 3% to Rs212 and Sterlite Industries added 2% to Rs833.
Sugar stocks were in momentum after the government announced that they would subsidies loans to the sugar mills and make blending of 5% ethanol mandatory. Renuka Sugar jumped over 11% to Rs814, Bajaj Hindusthan surged by over 8% to Rs170 and Balrampur Chini advanced over 5% to Rs75.
Capital Good stocks were the star performers. The index was up by over 4%. BHEL, surged over 4% to Rs2326, L&T rose over 6.5% to Rs3372, ABB gained 1.3% to Rs1397 and Punj Lloyd has added 6.5% to Rs337.
