The firm had posted strong third quarter results.
R. Chandrasekaran
CHENNAI:Technology behemoth Infosys Technology provided the much needed vitamin to the Indian stock markets towards the end of the week to lift the lackluster trading during the week. The losses for the week would have been wider but for the strong third quarter results and the company’s bumping up of revenue outlook for the fiscal year 2013. The IT bellwether firm’s strong results ensured that the markets ended on a flat on Friday. This also meant that the week could witness three days of losses.
There was not much from the global front to guide the markets higher except the world’s largest aluminum maker Alcoa’s strong Q4 results and a somewhat better outlook in the current year. However, the minutes from the U.S. Fed suggesting an end to quantitative easing in 2013 dragged the stocks down when it opened for the week thereby snapping four days of winning streak. This meant that the markets witnessed downside pressure for the first time on Monday in the current year.
The prime minister’s comments on Tuesday that India could come back to accelerated growth rate in view of its strong economic fundamentals and ably supported by the government’s various initiatives and policies provided little respite on Tuesday when the major indices gained marginally. The Bombay Stock Exchange’s 30-share barometer recorded a slender loss on Thursday and closed the week on a flat note or with a nominal gain on Friday. The BSE’s Sensex witnessed 92.66 points fall on Monday, gained 51.1 points on Tuesday only to lose 75.93 points on Wednesday and extended loss by another 3.04 points on Thursday. In these depressed sentiments, the indices would have extended its losses further but for the Infosys strong results that ensured flat closing on Friday.
Among the major news to hit the week was the central bank’s relaxation of overseas borrowing limits for infrastructure finance firms up to 75 percent of their owned funds from the earlier limit of 50 percent; Fitch reiterated its ‘negative’ outlook on India’s sovereign credit rating blaming slower economic uptick, continuous inflationary pressures besides ambiguous fiscal outlook; foreign exchange reserves rises by $39.4 million to $296.58 billion; Credit Suisse has trimmed growth outlook for India to 5.7 percent for fiscal year 2013; India has reduced its fuel demand outlook by nearly one percent to 155.6 million tons citing economic slowdown; industrial production skid 0.1 percent year-over-year in November while revising October data upwardly to 8.3 percent from 8.2 percent; exports contracted 2 percent in December; and the government is likely to introduce the Real Estate Regulation bill in the upcoming budget session of the parliament next month. Aside from this, in a setback to business tycoon Vijay Mallya, Securities Exchange Board of India has asked Diageo to revise the clauses in agreement with the United Breweries Group since the deal violates local rules and employees of Kingfisher Airlines sought closure of the carrier.
Significantly, the government has announced a hike in passenger rail fare for the first time in 10 years thus indicating the ruling coalition’s confidence in taking some bold steps to discipline the finance aspect. This also suggests a similar move in diesel price and LPG cooking gas is in the cards, which would help oil marketing companies offset their losses.
For the week ended January 11, the BSE’s benchmark index shed 120.44 points or 0.61 percent to close at 19663.64 points, whereas the National Stock Exchange’s Nifty ended the week with a loss of 64.85 points or 1.08 percent to finish the week at 5951.3. Among the sector in BSE indices, IT, technology and auto advanced 7.8 percent, 5.6 percent and 0.4 percent respectively, whereas other sector closed in the red with capital goods being the worst performer dragged down by L&T following the downgrading of shares by brokerage house.
The week undoubtedly belonged to Infosys, which jumped 15.51 percent during the week and led the A group shares of BSE following the Q3 results and lifting of revenue forecast for the fiscal year 2013. The news has virtually reversed investors’ sentiments towards the stock. For over a year, investors have been shunning Infosys stock as it was seen growing less than its peer Cognizant Technology Solutions and always reduced its full year guidance. The strong results from IT bellwether also bumped up sentiments towards other IT companies. Of the top 10 stock performers, four belonged to IT sector. Satyam gained 6.4 percent, whereas Tech Mahindra and Wipro advanced 5.02 percent and 4.03 percent, respectively.
While nine companies’ shares gained over 2 percent in A group, 11 stocks edged up by more than 1 percent during the week. Another 20 companies shares managed to gain less than a percent.
On the losers pack, financial and realty stocks, which advanced in the previous two weeks, witnessed selling pressure as investors locked profit at higher levels. However, it was Vijay Mallya-controlled United Breweries that plummeted 12.61 percent and led the pack. Oberoi Realty and Ambuja Cements followed it with a loss of 9.64 percent and 9.45 percent, respectively. At least 28 stocks in A Group dropped over 5 percent. While 21 stocks skid 4 percent or more, 28 companies’ shares slipped more than 3 percent during the week. These included Federal Bank, HDFC, IDFC, DLF, Indian Bank, Indian Overseas Bank, Canara Bank, and ITC.
On the overall scenario, Shree Rama Multi surged 53.92 percent followed by Times Guaranty by 45.93 percent and Nouveau Global Vent by 45.42 percent. These apart, three more stocks surged over 40 percent, while 15 stocks climbed 30 percent or more and 71 companies shares jumped over 20 percent.
Similarly, on the losing side, 19 stocks witnessed more than 20 percent drop led by Arshiya International by 43.84 percent followed by Pankaj Polypack by 38.89 percent, over 80 stocks recorded 10 percent or more fall during the week.
While domestic mutual funds were the net sellers to the tune of Rs.14.46 billion until January 9, foreign institutional investors or FIIs were the net buyers for $1.61 billion until January 11 and for the week ended January 11, FIIs have pumped in $780.7 million in Indian equities. The continued FIIs investments indicate that growth prospects are intact.
The upcoming week will see whether the gains provided by Infosys can be extended by other sectors when the December quarter numbers started trickling in.