Profit booking drags Sensex down by 563 points in 2 days
15 Oct 2010
Equity benchmarks have seen heavy profit booking since yesterday and wiped out nearly 563 points in two days while it had surged 485 points on Wednesday. The Nifty has been getting selling pressure whenever it starts inching towards all-time high.
The sell-off across all sectors brought the index down to settle down below 6100 after hitting a weekly high of 6284.10. Profit booking was might be because of Coal India issue of Rs 15,000 crore, which is set to open on Monday, October 18 for subscription.
The beginning of earnings season for the quarter ended September 2010 was good. India's second largest IT services exporter Infosys Technologies and third largest private sector bank by market cap Axis Bank reported better-than-expected numbers. However, these stocks already discounted these numbers as they had rallied sharply ahead of earnings; Infosys surged 9% in last one month.
IT bellwether reported 16.73% jump in net profit of Rs 1737 crore and 12.08% rise in net sales of Rs 6947 crore on QoQ basis. However, CNBC-TV18 expected revenues at Rs 6775.66 crore and net profit at Rs 1718.11 crore. But the market could slightly be disappointed with the rupee guidance; the company expects FY11 EPS at around Rs 115.07-117.07 while in previous quarter it had expected FY11 EPS at Rs 112.21-116.73/share. Rupee appreciation might be the reason as foreign institutional investors have pumped in more than Rs 1 lakh crore in 2010 and they were net buyers to the tune of more than Rs 43,000 crore since September 2010.
Infosys is concerned about maintaining a healthy operating profit margin (OPM) due to currency headwinds, volatility in the markets and global uncertainties.
Moshe Katri, MD, Cowen and Company said that fundamentals will remain healthy for Infosys. ''Infosys numbers will continue to gradually move higher,'' he added. He also said that any upgrade on the company will be decided upon the currency trends.
