Sensex ends 130 pts down on poor Infy Q2; awaits inflation

The BSE Sensex fell 130 points on Friday following bleak outlook presented by Infosys for its full year numbers and on less hopes of rate cut by the Reserve Bank of India (RBI). The index closed at 18,675.18.

Software bellwether Infosys' net profit grew by 3.5 percent to Rs 2369 crore, which was in-line with analysts' forecast. But the cut in EPS and dollar revenues guidance for FY13 and bad performance at operating level dampened the mood. The stock plummeted 5.36 percent.

Infosys is now walking an extremely tight rope in which it will have to clock growth rates in excess of 3.5% in both the subsequent quarters which are supposed to be seasonally weak in nature, says Rajni Ghildiyal, Senior Analyst of Asit C. Mehta Investments Interrmediates Ltd.

"This makes us believe that Infosys will find it extremely difficult to achieve 5% revenue growth for FY13E. That in turn could be detrimental for earning estimates and valuations," she said.

Infosys said that its CFO V Balakrishnan would give up his position from October 31, 2012 and will now look after BPO operations, Finacle and India operations. This is a also cause of concern as its does not give out a good picture of the company which is not doing well since past 3 quarters, says Ankita Somani (Research Analyst-IT & Telecom) of Angel Broking

Meanwhile, the 50-share NSE Nifty declined 32 points to 5,676.05, weighted down by ICICI Bank, HDFC, Bharti, Tata Motors and SBI.

On the economic front, industrial output, which was slightly better-than- expectations today, will not have any impact on RBI policy, say experts.

The Index of Industrial Production (IIP) grew at 2.7 percent in August against a dismal -0.2 percent in July.

Inflation, which is scheduled for Monday, will be closely watched by investors ahead of RBI policy.

Manish Wadhawan of HSBC Bank believes the IIP number is more on expected lines, but as far as its impact on the monetary policy is concerned, it is a neutral number. Therefore, it will not impact the RBI's rate cut decision on October 30.

The September Consumer Price Index (CPI) number disappointed as combined inflation rose 9.73% year-on-year, up 10.03% month-on-month. According to him, the inflation numbers have a greater impact on monetary policy and looking at the high CPI numbers, it is difficult to say what the RBI might do. If the inflation figure released on Monday is around 7.75%, there may be a 50-50 chance of a rate cut, he says.

Country's largest lenders State Bank of India and ICICI Bank lost 0.8 percent and 1.22 percent, respectively. Housing finance company HDFC was up 1 percent.

But HDFC Bank gained 0.94 percent as the bank's net profit rose by 30 percent year-on-year to Rs 1,560 crore in Q2, driven by a robust loan growth coupled with lower provisions.

Top telecom operator Bharti Airtel and state-run power equipment maker BHEL plunged 2.5 percent each.

Commercial vehicle maker Tata Motors, state-run oil & gas producer ONGC, drug producers Sun Pharma and Dr Reddy's Labs were down 1 percent each.

Software services exporter Wipro fell 2 percent while its rival TCS, which will declare its Q2 numbers next Friday, rose 0.66 percent.

ACC and Ambuja Cements rallied 4 percent and 2.75 percent, respectively. Heidelberg Cement rose 0.5% on solid numbers.

The BSE Midcap and Smallcap indices closed flat to positive, outperforming benchmarks.

Balrampur Chini, Dhampur Sugar, Simbhaoli Sugar and Uttam Sugar rose 2-9 percent after sugar decontrol report unveiled by Rangarajan Committee today.

For the week, the Sensex fell 1.4 percent while the Nifty lost 1.23 percent.

Following companies will declare their September quarter results next week: Reliance Industries, Axis Bank, Shree Cements, NIIT Tech, Mindtree, HCL Tech, ACC, Ambuja Cements, ITC, TCS, Bajaj Auto and UltraTech Cement.

Indian equities extended losses in afternoon trade with the BSE Sensex falling more than 150 points, dragged down by capital goods and banking & financials. Telecom operator Bharti Airtel and state-owned power equipment maker BHEL plunged 2.5 percent each.

Infosys, country's second largest software services exporter fell 6 percent following cut in full year earnings per share and dollar revenues guidance by the company. Its rivals Wipro lost 1.6 percent while TCS rose 0.4 percent.

The 30-share BSE benchmark slipped 154.80 points to 18,649.95 and the 50-share NSE benchmark went down 40 points to 5,669.15. The Indian rupee too depreciated, losing by 18 paise to 52.83 against the US dollar.

Private sector lender ICICI Bank and commercial vehicle maker Tata Motors were down 1.28 percent each.

Engineering conglomerate Larsen & Toubro, public sector lender State Bank of India and housing finance company HDFC fell 0.6-0.9 percent.

Shares of HDFC rose 1 percent and private sector lender HDFC Bank were up 1 percent each.

Shares of Cipla, HUL, NTPC, Tata Power, M&M and Sterlite gained 0.2-0.8 percent.

The NSE benchmark continued to trade below the 5700 level, weighed down largely by Infosys. HDFC Bank rose 1.5 percent on improved non-performing assets (NPAs) in the second quarter of FY13; net profit of the private sector lender came in in-line with expectations at Rs 1,560 crore while provisions declined to Rs 293 crore from Rs 487.3 crore YoY. Net interest margin also improved to 4.2 percent in September ended quarter.

The 30-share BSE Sensex fell 78.19 points to 18,726.56 and the 50-share NSE Nifty lost 18 points to 5,689.90.

Shares of software bellwether plunged 5 percent after poor guidance for full year while its rival Tata Consultancy Services gained 0.5 percent.

Telecom operator Bharti Airtel, state-run oil & gas producer ONGC, housing finance company HDFC and country's largest private sector lender ICICI Bank slipped 1 percent each.

Drug producers Sun Pharma and Dr Reddy's Labs and state-run power equipment maker BHEL were down 1 percent each too.

Engineering conglomerate Larsen & Toubro and FMCG major Hindustan Unilever were 0.4 percent each.

Shares of GAIL, Tata Steel, NTPC, Sterlite, Tata Power, Cipla and Jindal Steel gained 0.7-1.3 percent.

The broader markets retained their outperformance compared to benchmarks with the BSE Midcap and Smallcap indices gaining 0.5 percent each.

Indian shares remained under selling pressure due to weakness in Infosys and ICICI Bank. Capital goods majors Larsen & Toubro and BHEL were down 0.6-1 percent after disappointing performance by the sector in August and less hopes of cut in policy rates by the Reserve Bank of India on October 31.

The 30-share BSE Sensex slipped 121 points to 18,684 and the 50-share NSE Nifty fell 30.45 points to 5,678. Weak opening of European markets too added pressure on the Indian equities - France's CAC, Germany's DAX and Britain's FTSE declined 0.4 percent in early trade on worries about sluggish economic growth.

Country's largest lender State Bank of India and private sector lender ICICI Bank were down 0.5-1 percent on easing of hopes of cut in policy rates despite improved growth in industrial output. Housing finance company HDFC declined 0.8 percent while HDFC Bank trimmed gains to 0.4 percent from 1.2 percent.

But the CPI inflation remained in double digit; therefore experts feel the RBI will not consider rate cut. PMEAC chairman C Rangarajan said monetary policy would be largely determined by inflation. So the inflation for September, which is scheduled for Monday, will also be closely watched by investors. Today CPI combined inflation rose 9.73% in September versus 10.03% in July.

Infosys, which was down 5 percent, disappointed the street by cutting earnings per share and rupee dollar revenues guidance for full year. Meanwhile its rival TCS, which will declare its results next Friday, gained 1 percent.

Top telecom operator Bharti Airtel, commercial vehicle maker Tata Motors, drug producers Sun Pharma and Dr Reddy's Labs lost 1 percent each.

Sugar stocks gained 1-5 percent after the C Rangarajan committee's sugar decontrol report. Panel has adviced scrapping sugar levy quota system and state-declared cane prices. It also recommended paying farmers FRP at time of cane purchase.

Indian shares remained lacklustre despite improvement in industrial output data. Index of Industrial Production for August came in at 2.7 percent, which was higher than expectations of 0.94 percent while July output revised to -0.2 percent from 0.1 percent (provisional) earlier.

Now the Reserve Bank of India will check inflation for September (that will be announced on Monday) before taking any decision on policy rates. Majorly experts feel the central bank will not go for any rate cut on October 31.

Private sector lender ICICI Bank dropped 0.5 percent on less hopes of rate cut in policy meet. State Bank of India and HDFC Bank too trimmed gains to 0.3 percent and 0.8 percent, respectively.

Engineering conglomerate Larsen & Toubro lost 0.4 percent after capital goods growth came in at minus 1.7% in August as against 4% in a year ago period.

The 30-share BSE Sensex fell 19 points to 18,786.10 and the 50-share NSE Nifty declined 1 point to 5,707.05. But the BSE Midcap and Smallcap indices gained 0.8 percent each.

Infosys, country's second largest software services exporter fell 4.6 percent following cut in EPS and dollar revenues forecast for full year by the company. Net profit and revenues, which grew 3.5 percent and 2.5 percent, were in-line with expectations. Its rival TCS recouped its initial losses, rising 0.7 percent.

Deccan Chronicle Holdings shot up 5 percent after the board of directors has approved a sale of Deccan Chargers to Kamla Landmarc.

The 30-share BSE Sensex continued to trade marginally lower amid volatility, weighed down majorly by the Infosys (which has the third highest weightage on the Nifty 50 index following ITC and Reliance).

Software bellwether Infosys dropped over 4 percent (though trimmed down losses from 8 percent) following lower than expected guidance for current financial year 2012-13. Net profit and revenues in the second quarter, which were in-line with expectations, rose 3.5 percent and 2.5 percent quarter-on-quarter, respectively. But the company has cut the full year earnings per share forecast to at least Rs 160.61 from Rs 166.46 guided earlier and also revised dollar revenue guidance (in constant currency) downward to 5.7% from 6% earlier.

Sanjeev Prasad of Kotak Institutional Equities was surprised by Infosys' reported Q2 performance. He says company's business is clearly under significant pressure. "We have maintained reduce rating on all frontline IT companies. We will be worried about other tier I IT companies post Infosys Q2."

The BSE benchmark declined 21.38 points to 18,783.37 and the NSE benchmark was down 5.05 points to 5,703.

TCS, country's largest software services exporter recouped early losses to trade 0.4 percent up while its rival Wipro was down 1.4 percent.

Private sector lender HDFC Bank rose 1 percent while its rival State Bank of India gained 0.4 percent.

FMCG majors ITC and Hindustan Unilever were up over 0.5 percent. Metals stocks like Tata Steel, Hindalco and Sterlite Industries rallied 1 percent.

But the broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices gaining 0.7 percent each. About two shares advanced for every share declining on the National Stock Exchange.

In the second line shares, DB Realty, United Bank, Prestige Estate, India Cements and Anant Raj Industries gained 4-5 percent while Tulip Telecom, Sun Pharma Advanced, Sobha Developer, AstraZeneca and Carborundum lost 2-5 percent.

Indian shares opened marginally lower on Friday following disappointing outlook for FY13 by the country's second largest software services exporter Infosys.

The 30-share BSE Sensex fell 89.84 points to 18,714.91 and the 50-share NSE Nifty slipped 24.75 points to 5,683.30.

Shares of software bellwether Infosys plunged nearly 8 percent after the company revised its full year guidance downward, though the second quarter numbers were in-line with expectations.

Net profit rose by 3.5 percent quarter-on-quarter to Rs 2,369 crore  and revenues went up by 2.52 percent to Rs 9,858 crore in the quarter ended September 2012. However, the company cut its earnings per share guidance for full year to Rs 160.61 a share from Rs 166.46 a share earlier and also reduced constant currency dollar revenues guidance to 5.7% versus 6%.

CFO V Balakrishnan will give up its position with effect from October 31, but he will continue to be a board member. Rajiv Bansal, who is currently a VP - Finance, will become new CFO.

Its rivals TCS and Wipro were down 0.7 percent and 1.5 percent, respectively.

Engineering conglomerate Larsen & Toubro and commercial vehicle maker Tata Motors lost 0.6 percent each.

Top lenders State Bank of India and ICICI Bank were marginally lower while their rival HDFC Bank rose 0.7 percent.

FMCG majors ITC and Hindustan Unilever gained 0.7 percent each.

Oil & gas producers Reliance Industries and ONGC were up 0.2-0.4 percent.

Bajaj Hindusthan and Balrampur Chini were up 1 percent ahead of report from Rangarajan committee on sugar decontrol today.

Advancing shares outnumbered declining by a ratio of 685 to 415 on the National Stock Exchange.