Market close: Sensex gains 421 points on strong Infosys numbers
While IT stocks moved higher after Infy's results, bank counters shot up on poor IIP numbers raising possibility of no further rate hikes
3.30 p.m:Sensex closed near the high of the day, rising by 421 points at 16,958 while Nifty closed the day at 5104, up by 130 points.
A strong set of numbers resulted in Infosys shooting up by 7.05 percent to Rs 2681. Market was upbeat after the company marginally improved its revenue guidance.
Listen to our market wrap below:
Following are the key highlights of the conference call the company had with analyst and fund managers:
•In consulting services, the company has experienced the fastest growth in the industry.
•It plans to hire 8,000 employees next quarter, 45,000 for the whole year.
•Utilisation levels are likely to fall marginally (around 2 percent) as they plan to hire more employees.
•They have added two large business IT deals and two business transformational and consulting deals this quarter.
•The company has 388 one-million-dollar clients and 35 fifty-million-dollar clients.
•Its tax rate for the 12 months ending March 2012 is estimated at 28-28.5 percent. Infosys derive 29 percent of their revenues from special economic zones; most of these zones have completed 5 years, so tax rates are expected to increase.
•Operating profit margins are expected to decline 50-100 basis points for this financial year.
•In the short term, the crisis in Europe is expected to continue, while in the medium term, things should look better. The company will continue to invest in Europe; they also plan to hire 500 employees in the continent.
•In Europe, retail and telecom deals are picking up.
•The deal pipeline for the quarter is strong and continues to remain so. They have 27 transformational deals in the pipeline. However, the company has noticed decision-making is slow as clients are actively scrutinising large investments. Meanwhile, short-term deals continue to take place.
•Have a total of 637 clients currently. Infosys has also added 45 clients this quarter out of which ten are from Europe.
•Pricing is set to remain stable for the full year.
•Infosys expects Earnings per share (EPS) of Rs143.02-145.26 for the year ended March 2011, significantly higher than Rs128.20-130.08 it had expected earlier, due to rupee depreciation.
•Revenue for the year ended March 2012 is expected to rise in the range of 21.8-24 percent.
Meanwhile the banking stocks were also bouyed by lower IIP numbers, anticipating RBI will put an halt to interest rate hike. SBI moved up by 6.5 percent, ICICI Bank moved up by 3.54 percent to close at Rs 862 and Axis Bank increasing by 4 percent to Rs 1095.
United Breweries and Kingfisher saw buying on news of Mallya selling stake in Force India. United Breweries increased by 13.37 percent to Rs 428.30 while Kingfisher closed 3.47 percent Rs 20.85.
Among the other counters that moved were Jubilant Foodworks which rose by 9.67 percent to Rs 904.
3.00 p.m: Markets continue to trade higher with the Sensex rising by 424 points to 16,961 and Nifty rising by 127 points to 5101.
IT index has moved up by 5 percent, thanks largely to Infosys, which is up by 7.3 percent at Rs 2687, TCS,up by 3.9 percent at Rs 1,093, and Wipro, which is up 2.63 percent at Rs 350.
A strong move in bank stocks has resulted in a fresh wave of buying in the market. Bank stocks are trading almost 3 percent higher. SBI is trading 5.86 percent higher at Rs 1,868, followed by ICICI Bank, which is trading 3.25 percent higher at Rs 860.Axis Bank is up 3.7 percent at Rs 1,091. Banking stocks are moving higher mainly on the hope that lower IIP numbers will prevent RBI from raising interest rates further.
Though bank stocks have moved higher, bond markets do not seem to be reacting to the IIP numbers. Bond yields are trading at a three-year high of 8.73 percent.
JSW Steel has informed the exchanges that it is entering in a joint venture with Marubeni-Itochu Steel Inc to set up a steel-processing centre with a capacity of 180,000 tonnes.
Coal India continues to trade lower on account of its e-auction coal sale being diverted to NTPC. However CNBC reports say that NTPC might buy the coal at e-auction prices.
Jubilant Foodworks continues its strong up move, rising by 9 percent at Rs 900.
2.30 p.m: Sensex trades 320 points higher at 16,863, while the Nifty trades at 5,072, higher by 98 points.
The Power Secretary has said that part of the e-auction sales will be diverted to supply fuel-hungry power companies. The move is negative for Coal India, which slumped 2.39 percent to Rs 337.
Meanwhile, analyst reports have started pouring in on their reactions on Infosys. By and large, analysts are generally bullish on the results. The stock has touched a new high of Rs 2,674, higher by 6.77 percent.
Nomura has maintained its Buy stance on Infosys as the company has not cut its guidance figure. At the current valuation, Infosys is a better bet than TCS, says the report.
Morgan Stanley has maintained their OverWeight rating on revised earning guidance.With an improvement in earnings and margins back in the numbers, concerns about management change would reduce, says the report.
Goldman Sachs has maintained its Buy on the company but would like to review the numbers based on clarity on demand outlook and sustainibility of margins.
Societe Generale has maintained their Sell rating on the stock as the company has revised its revenue estimates but not its earnings per share in dollar terms.
Citi has maintained it Hold rating on the company as macro remains challenging and risks to the company's guidance remains.
1.15 p.m: Falling European markets have dragged Indian markets lower. Sensex trades at the low of the day at 16,637 just over 100 points higher than the previous day. Nifty is trading 37 points higher at 5012.
European markets are trading nearly 1 percent lower after the Slovakian parliament rejected the proposal to increasing the bail out package..
12.30 p.m: Markets are trading near the high of the day, led by a strong move in bank stocks. The Sensex is trading 241 points higher at 16,777, while the Nifty is trading at 5,053, up by 78 points.
European markets, however, have opened lower by 0.5 percent, which can dampen sentiment among Indian investors.
Lower IIP numbers of 4.1 percent has raised hopes of the central bank stopping its series of rate hikes. Banking index is trading 1.66 percent higher, with SBI trading at Rs 1,811, higher by 2.61 percent, while ICICI Bank is up by 1.66 percent at Rs 846.
Coal India is the top loser among frontline stocks, falling by 3 percent on reports that the company's officers may going on an indefinite strike. The stock trades at Rs 335.
Dhanlaxmi Bank has further clarified rumors about its solvency today. Top officials at a press conference said there was no issue with the bank with respect to compliance or asset quality. On Tuesday, the All India Bank Officers Confederation accused the bank of manipulating accounts and questioned its capital adequacy.
Zenith Info sheds 50 percent
11.30 a.m: Markets are trading near the low of the day after the IIP numbers were declared. The Sensex trades 92 points higher at 16,689, while the Nifty is at 5,024, higher by 49 points. The August IIP number of 4.1 percent is lower than analyst forecasts of 5 percent.
DoT has ruled that the 3G roaming agreements between Bharti Airtel, Vodafone and Idea Cellular are 'illegal' and has asked the department to initiate action against the three companies.
FCCB (foreign currency convertible bonds) outgo has claimed its next victim.Zenith Infotechhas fallen from Rs 190 to Rs 101 in a span of 5 days. The company has outstanding FCCB of over $77 million, out of which $27 million matured in September 2011. There are no signs of the company being able to pay the same or convert it into equity.
11.00 a.m:Markets continue to trade higher, with the Sensex trading 219 points higher at 16,755, and the Nifty trading at 5040, up by 66 points.
Infosys is trading 5.65 percent higher at Rs 2,646, while TCS is up nearly 4 percent at Rs 1,082. BSE IT index is trading 4.5 percent higher.
Auto stocks are witnessing selling pressure, with Tata Motors falling by 2.74 percent to Rs 172, whileM&M is down by 1.13 percent at Rs 790.
Meanwhile, Alcoa has announced its results in the US. The company has warned of a weak economic outlook for the rest of the year, particularly in Europe. Its third-quarter profit jumped from a year ago but was lower from the previous quarter. It was also below market expectations. The company management's said Europe's debt crisis had prompted customers from the region to reduce orders. Battered confidence is the biggest problem, the management added. The results will have implications for Hindalco and Nalco.
Australia's new carbon tax to hit coal importers
10.00 a.m: Infosys has moved higher, trading at Rs 2,658, up by 6.15 percent, while TCS has moved up by 4.5 percent to Rs 1,088. HCL Tech is trading 4.4 percent higher at Rs 421.40. BSE IT index is trading nearly 5 percent higher over its previous close.
Meanwhile, the Australian parliament has passed the controversial carbon tax proposal. The tax would require miners and consumers of coal to pay for each tonne of carbon dioxide emitted.This could be negative for Indian companies that import from Australia like JSW Steel, Adani Power, Gujarat NRE and the Lanco Group.
Infosys lifts Sensex by 200 points
9.40 a.m: Infosys continues to maintain its high and trades at Rs 2645 up 5.66 percent. BSE Sensex trades at 16,690 higher by 153 points, while NSE Nifty has moved higher by 51 points t0 5,027.
Taking cues from Infosys' results, other technology counters are also moving higher. TCS is trading at Rs 1,070, higher by 2.77 percent, while Wipro trades 3.66 percent higher at Rs 354.35. HCL Tech is trading almost 4 percent higher at Rs 419. The IT index is trading 4.35 percent higher.
Among the other stocks in news are Max India, which is trading near the low of the day at Rs 184.55, although it opened at Rs 194. The stock is still 3.7 percent higher from its previous close. The company has entered into a non-binding agreement to sell a 26 percent stake in its unit, Max Healthcare Institute, to South Africa's Life Healthcare Group.
Infosys' upbeat numbers take market higher
9.15 a.m: Infosys has opened 4.67 percent higher at Rs 2,618, which has led to the Sensex rising by 136 points to 16,670, and Nifty by 42 points to 5,016.
Infosys results is likely to have an impact on the market. The company has posted better-than-expected numbers. Against an expected profit number of Rs 1,891 crore, the company has posted a profit of Rs 1,906 crore.
Importantly, the company has come up with a positive surprise by announcing better-than-expected guidance. Though the general expectation was a reduction in guidance, the company has come up with positive guidance numbers. The company is talking of a Rs 143 to Rs 145 earning per share number, a sharp rise over Rs 133-135 announced earlier. The dollar guidance of growth between 13.7 percent and 16.1 percent to is also higher than expected.Addition of clients and employees has been better than expected.
Infosys can open higher since the results are better than what the street has expected. However, with the general weakness in the international market, we can see some pressure in the counter after the initial euphoria dies down.
The other counter than can see action is Max India, which has sold a 26 percent stake in Max Healthcare for Rs 516.5 crore. This sale will help a long way in reducing the company's interest cost, which is the main reason for the company making losses.
With the Slovakian parliament rejecting the bailout fund, international market can come under pressure.
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