SENSEX 17422.51 -104.20
NIFTY 5210.40 -39.00
NASDAQ 2176.05 +6.87
DJIA 10426.31 -11.11
RS/$ 46.25 -0.16
Indian stock markets ended lower on Tuesday, as investors booked profits despite robust November IIP data and better-than-expected third quarter earnings by Infosys Technologies. Market opened with a gap-up reacting to Infosys earnings which beat analysts' expectations. However, profit booking in realty, metals and banks maintained pressure on the indices and pulled them lower. Rise in Index of Industrial Production also failed to lift sentiments.
Bombay Stock Exchange's Sensex ended at 17422.51, down 104.20 points or 0.59 per cent. The index touched a high of 17612 and low of 17392.55.
National Stock Exchange's Nifty ended at 5210.40, down 39 points or 0.74 per cent. The 50-share index hit a high of 5300.50 and low of 5200.95. The BSE Midcap Index ended 1.14 per cent lower. Amongst the sectoral indices, BSE Realty Index was down 3.10 per cent,
BSE Metal Index slipped 2.30 per cent and BSE Bankex fell 1.96 per cent. BSE IT Index was up 3.91 per cent. IT stocks were buzzing on the back of encouraging results from Infosys. The company reported 2.29 per cent rise in net profit to Rs 1471 crore for the quarter ended Dec 31, 2009 as against Rs 1438 crore in the sequential period, way ahead of analyst expectations. Net sales were reported at Rs 5335 crore for the Dec quarter compared with Rs. 5201 crore in the previous quarter. In its result update on the stock, , After 6 years, we have seen a December quarter this strong. With a lot of business billed hourly/daily, more holidays in December quarter mean a weak seasonal pattern. Not so this time. Finally, Infosys raised full year ending Mar10 EPS guidance by nearly 7% with just a quarter to spare. All this points to one trend - outsourcing is flowing in strongly. Salary inflation is benign. Salaries are 75% of total costs. So margins are protected with an upward bias. Manpower utilizations are at decade lows. Each 1% move there helps margins by 40bps, helping address persistent currency strength concerns. And street estimates are too low, scepticism on valuations too high in context of earnings upgrades that will happen and lie ahead. We rate Infosys a BUY with Rs 3100 target price.
India's IIP grew at robust 11.7 per cent in November fuelled by stimulus-backed demand for manufactured goods, particularly consumer goods. Industrial production once again beat expectations rising 11.7%, vs. Citi's estimate of 10.2%, and the consensus estimate of 10%. On a cumulative basis, growth during Apr-Nov was 7.6% vs. 4.1% last year. Going forward, given the low base (growth averaged 0.3% during Nov-Mar08), coupled with signs of demand picking up, we expect industrial growth to come in at the 9-11% range in the coming months. Taking into account the buoyancy in the industrial data, we now expect industry GDP to come in at 8.4%YoY versus our earlier estimate of 7.5% in FY10, Wipro (4.78%), TCS (4.73%), Infosys Technologies (3.69%), HCL Tech (3.43%) and M&M (2.23%) were amongst the top Sensex gainers. The decline was led by IDEA (-5.16%), DLF (-3.94%), Reliance Communications (-3.73%), Tata Steel (-3.62%), and Sterlite Industries (-3.06%). Market breadth was negative on the BSE with 1848 losers and 1080 gainers.
