Markets trade flat, banking shares weigh

Markets were trading flat on monday morning tracking subdued global cues as cautiousness prevailed ahead of quarterly earnings season. The Nifty was up 2 points, at 4,888 and the Sensex surged 23 points, at 16,254.

Across Asia, markets were trading mostly lower on Monday morning. The Japan's Nikkei Stock Average was shut on account of holiday. The Hang Seng index dipped over 1% and the Shanghai Composite was off 0.4% due to losses in property and energy shares.

Back in India, the Nifty touched a high of 4,922 on Friday, but the rally may peter out going forward. Technical analysts said, the Nifty will face resistance around 5,050 and then it will correct to 4,350 levels if it break 4,800 level.

Going forward markets will take cues from the IIP (Industrial Production) data for the August on Wednesday, the WPI (Wholesale Price Index) for September on Friday and the second quarter results which kick starts with Infosys numbers on Wednesday this week.

Economists expect IIP at around 5.5% y-o-y for August against 3.3% reported for July. Analysts expect India Inc. to report the worst quarterly results in two years as rising interest rates and high inflation will dent profitability.

Prabhudas Lilladher in the earnings preview said, "Profit after tax of Nifty 50 companies (excluding oil & gas) continues on downward trajectory and is expected to post anemic 6.8% growth y-o-y." Prabhudas Lilladher expects revenue growth at 15.5% y-o-y and Ebitda margins (ex-BFSI) to decline by 149 bps y-o-y.

IT bellwether Infosys which commences the results season on October 12th is expected to maintain the dollar revenue growth at 18-20% y-o-y and the EPS guidance will be revised to Rs 130-132 on back of rupee depreciation according to Prabhudas Lilladher.

BSE IT shares were leading the gains; the index was up over 1%. Infosys advanced 1%, Wipro and TCS were up 0.4% and 0.1% each.

BSE Bankex was the one of the top losers, down 0.4%.  Axis Bank and State Bank of India declined over 1% each and ICICI Bank was off 0.7%.

From the broader markets, the midap and the smallcap indices were up 0.4% and 0.2% each.

Among individual stocks, Bharti Airtel continued to lead the losses for the second consecutive day; the stock was down 3% and Idea Cellular also declined 3% as the government is expected to unveil the new telecom policy which will incorporate the rules regarding 2G pricing, and mergers and acquisitions. Both the telcos were battered last week following news of misreporting revenues.

On the Sensex, Tata Motors and Coal India were the top gainers, up almost 2% each, followed by Sterlite, up 1.3%. Major losers were Maruti, down over 3%, Jindal Steel slipped 2% and Larsen & Tourbo, declined 0.7%.

Market breadth was positive, 1117 stocks advanced for 459 declining stocks.

IT bellwether Infosys which commences the results season on October 12th is expected to maintain the dollar revenue growth at 18-20% y-o-y and the EPS guidance will be revised to Rs 130-132 on back of rupee depreciation according to Prabhudas Lilladher.