IT stocks drop as TCS warns of slower revenue growth in Q4 March 2014

Key benchmark indices settled marginally higher ahead of commentary about monetary policy from the US Federal Reserve later in the global day. With small gains, the 50-unit CNX Nifty attained its highest closing level in more than a week. The barometer index, the S&P BSE Sensex, edged up just 0.25 points, off 62.97 points from the day's high and up 50.85 points from the day's low. The market breadth, indicating the overall health of the market was positive.

Indian stocks edged higher for the third day in a row today, 19 March 2014. The Sensex has risen 58.25 points or 0.26% in three trading days from its recent low of 21,774.61 on 13 March 2014. The Sensex has risen 712.74 points or 3.37% in this month so far (till 19 March 2014). The Sensex has risen 662.18 points or 3.12% so far in calendar 2014 (till 19 March 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 4,384.15 points or 25.12%. From a record high of 22,040.72 on Tuesday, 18 March 2014, the Sensex has lost 207.86 points or 0.94%.

Coming back to today's trade, metal and mining stocks edged higher. JSW Steel rose after the company said its crude steel production rose 10% to 9.63 lakh tonnes in February 2014 over February 2013. Shares of IT major TCS dropped after the company's management at a recent analyst meet warned about a seasonal slowdown and said that the overall dollar revenue growth in Q4 March 2014 could be lower than that in Q3 December 2013. Shares of other IT stocks also declined after TCS warned of slower revenue growth in Q4 March 2014. Polaris Financial Technology was locked at 20% upper circuit to hit a 52-week high, with the stock extending Tuesday's rally triggered by the company announcing the demerger of its products business into a separately listed company.

Coal India declined in volatile trade after a bulk deal was executed on the scrip on BSE today, 19 March 2014. Among auto shares, Eicher Motors scaled record high.

A bout of volatility was witnessed in early trade as key benchmark indices regained strength after slipping into the red for the brief period after opening higher. Intraday volatility continued as key benchmark indices alternately swung between positive and negative zone in morning trade. Volatility continued as key benchmark indices trimmed gains after hitting fresh intraday high in mid-morning trade. Key benchmark indices alternately swung between positive and negative zone near the flat line in early afternoon trade. Key benchmark indices moved in a narrow range in positive terrain in mid-afternoon trade.

The S&P BSE Sensex edged up just 0.25 points to settle at 21,832.86, its highest closing level since 12 March 2014. The index gained 63.22 points at the day's high of 21,895.83 in mid-morning trade. The index fell 50.60 points at the day's low of 21,782.01 in morning trade, its lowest level since 14 March 2014.

The CNX Nifty garnered 7.40 points or 0.11% to settle at 6,524.05, its highest closing level since 10 March 2014. The index hit a high of 6,541.20 in intraday trade. The index hit a low of 6,506 in intraday trade.

The BSE Mid-Cap index garnered 20.21 points or 0.3% to settle at 6,739.58. The BSE Small-Cap index garnered 30.67 points or 0.46% to settle at 6,722.35. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 2566 crore, lower than Rs 2572.40 crore on Tuesday, 18 March 2014.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,458 shares rose and 1,342 shares fell. A total of 152 shares were unchanged.

The S&P BSE Metal index (up 2.12%), the S&P BSE FMCG index (up 1.21%), the S&P BSE Bankex (up 0.61%), the S&P BSE Capital Goods index (up 0.48%), the S&P BSE Healthcare index (up 0.45%) and the S&P BSE Consumer Durables index (up 0.34%), outperformed the Sensex.

The S&P BSE Auto index (down 0.07%), the S&P BSE Power index (down 0.11%), the S&P BSE Realty index (down 0.36%), the S&P BSE Oil & Gas index (down 0.49%), the S&P BSE Teck index (down 1.63%) and the S&P BSE IT index (down 2.24%) underperformed the Sensex.

Index heavyweight and cigarette maker ITC rose 1.12% to Rs 359.90. The stock hit high of Rs 360 and low of Rs 355.60.

Index heavyweight Reliance Industries rose 0.59% to Rs 900.60. The stock hit high of Rs 909.90 and low of Rs 895.55.

PSU OMC eged lower in choppy trade. BPCL (down 0.48%) and HPCL (down 1%) and Indian Oil Corporation (down 4.08%) declined.

The under-recovery on High Speed Diesel (HSD) applicable for second fortnight of March effective 16 March 2014 fell to Rs 7.16 per litre. The under-recovery was Rs 8.37 per litre during first fortnight of March 2014 from 1 March 2014. PSU OMCs are currently incurring combined daily under-recovery of about Rs 399 crore on sale of Diesel, PDS Kerosene and Domestic LPG at government controlled prices.

Coal India fell 2.74% to Rs 263 after a bulk deal of 14.67 lakh shares was executed on the scrip at Rs 270.20 per share at 11:30 IST on BSE today, 19 March 2014. The bulk deal saw 0.02% of Coal India's equity stake changing hands. The stock saw high intraday volatility. It rose as much as 1.88% at the day's high of Rs 275.50. It fell as much as 3.05% at the day's low of Rs 262.15.

Shares of IT major TCS dropped after the company's management at a recent analyst meet warned about a seasonal slowdown and said that the overall dollar revenue growth in Q4 March 2014 could be lower than that in Q3 December 2013. The stock lost 3.94%.

TCS' Q4 March 2014 revenue growth is likely to be impacted adversely by the seasonal slowness of budgeting quarter. Additionally, Q4 which is seasonally strong quarter for India geography is expected to see decline in India revenues this quarter. TCS has maintained its outlook of better growth in FY 2015 verses FY 2014, implying yet another year of industry leading growth. The India region is the only notably sluggish segment currently for the IT major.

Meanwhile, TCS after market hours today, 19 March 2014, announced the go-live of a new Maintenance, Repair and Overhaul (MRO) application program with PT Garuda Indonesia (Persero) Tbk. (Garuda Indonesia Airlines), Indonesia's national airline, via its aircraft maintenance subsidiary GMF Aeroasia.

Shares of other IT stocks also declined after TCS warned of slower revenue growth in Q4 March 2014. Tech Mahindra (down 1.03%), and HCL Technologies (down 0.78%) declined. Wipro rose 0.87%.

Infosys declined 2.39%. The company after market hours on Tuesday, 18 March 2014, said it has signed a five-year agreement with Lansforsakringar AB (LFAB) to provide application development and management support for its life and non-life insurance business. The new agreement with Infosys will see LFAB, owned by Lansforsakringar Alliance, a mutual organization of 23 regional insurance companies with a strong local brand, improve the quality of service and time to market for its alliance members at a reduced cost, Infosys said in a statement.

Polaris Financial Technology rose by maximum permissible level of 20% to Rs 183.35, also its 52-week high. Polaris Financial Technology on Tuesday, 18 March 2014, announced the demerger of its products business into a separately listed company. The scheme/structure is subject to the approval by the various regulatory authorities like stock exchanges, Securities and Exchange Board of India (Sebi), Madras High Court, Registrar of Companies, shareholders and creditors, Polaris Financial Technology said in a statement.

After demerger, the product company will be known as Intellect Design Arena (Intellect) and comprise of four distinct businesses: global universal banking; risk and treasury management; global transaction banking and insurance, the company said in a statement.

Polaris Financial Technology said it will continue to run the services business with a strong vertical and solution focus. As consideration for the demerger (technically called a vertical split), every shareholder of Polaris Financial Technology, will receive one share of Intellect.

The product business is significantly different from the services stream, in terms of investments into product development, talent and sales & distribution. Given this, the Polaris board, taking into consideration the recommendations made by the Special Committee comprising of independent directors of the Board as well as the Audit Committee, has decided to offer a special option to the shareholders of Intellect to exchange the shares (should they wish to) allotted pursuant to the demerger against fully secured non-convertible debentures (NCD). These NCDs shall have a face value of Rs 42, with a coupon of 7.75% per annum, redeemable at par after 90 days.

Bank stocks rose for the second day in a row as data released by the government last week showed that inflation based on both the consumer price index and the wholesale price index eased last month. Among private sector banks, ICICI Bank (up 0.43%), HDFC Bank (up 1.06%), Yes Bank (up 0.59%), and Federal Bank (up 0.35%), gained.

Among PSU bank stocks, Punjab National Bank (up 2.3%), State Bank of India (SBI) (up 0.29%), Union Bank of India (up 0.47%) and Bank of Baroda (up 0.11%) gained. Canara Bank (down 0.59%) and Bank of India (down 1.15%) declined.

State Bank of Travancore surged 5.77% after the bank scheduled a board meeting on 21 March 2014 to consider preferential issue, rights issue and declaration of interim dividend. State Bank of Travancore (SBT) after market hours on Tuesday, 18 March 2014, said its board of directors will meet on Friday, 21 March 2014 to consider preferential allotment of shares and also to consider rights issue to the shareholders of the bank. The board will also consider declaration of interim dividend to the shareholders of the bank. The bank has fixed 4 April 2014 as the record date for the purpose of payment of interim dividend, if declared.

State Bank of Bikaner and Jaipur gained 2.74%. After market hours on Tuesday, 18 March 2014, State Bank of Bikaner and Jaipur (SBBJ) said the bank has scheduled a meeting of the Board of Directors on 25 March 2014 to consider declaration and payment of interim dividend for financial year ending 31 March 2014. Meanwhile, the state-run bank during market hours today, 19 March 2014 said it has fixed 31 March 2014 as the Record Date for the purpose of payment of interim dividend, if declared.

Eicher Motors rose 3.2% to Rs 5,730.05 after hitting record high of Rs 5,809.95 in intraday trade.

Metal and mining stocks edged higher. Sesa Sterlite (up 2.35%), Hindustan Zinc (up 2.12%), Bhushan Steel (up 0.28%), NMDC (up 1.58%), Jindal Steel & Power (up 2.6%), Hindalco Industries (up 4.27%), Hindustan Copper (up 3.19%), Tata Steel (up 4.48%), and Steel Authority of India (SAIL) (up 1.98%) gained. National Aluminum Company fell 0.72%.

JSW Steel rose 2.6% after the company said its crude steel production rose 10% to 9.63 lakh tonnes in February 2014 over February 2013. Production of flat rolled products rose 12% to 7.99 lakh tonnes in February 2014 over February 2013. Production of long rolled products rose 16% to 1.53 lakh tonnes in February 2014 over February 2013. The figures for the corresponding period in the previous year are on a pro forma basis after giving effect to the scheme of amalgamation and arrangement between JSW Steel, JSW ISPAT Steel and others.

NTPC dropped 1.82%. Delhi's High Court has reportedly agreed to hear a petition by state-run power producer NTPC challenging a recent regulatory ruling on electricity pricing. The Central Electricity Regulatory Commission said last month that it would tighten incentive structures on capacity utilisation and tax treatments for NTPC. The High Court will hear the company's petition at the next hearing on 19 May 2014.

Gas utility stocks were in demand. Indraprastha Gas (up 3.36%), Gujarat State Petronet (up 3.13%), Gujarat Gas Company (up 0.33%) gained.

Telecom stocks were in demand. Idea Cellular (up 0.11%), MTNL (up 0.35%) Tata Teleservices (Maharashtra) (up 0.14%) and Reliance Communications (up 3.75%) gained.

Bharti Airtel rose 1.52%. Eight major mobile operator groups covering 551 million mobile connections across Africa and the Middle East plan to cooperate on network infrastructure sharing initiatives that aim to enhance the use of network infrastructure to connect underserved communities across these regions, said GSMA which represents the interests of mobile operators worldwide. The announcement was made in London on Tuesday, 18 March 2014. The initial group of senior leaders from mobile operator groups who support this initiative includes Christian de Faria, CEO Africa, Bharti Airtel, Ahmad Julfar, Group CEO, Etisalat Group, Sifiso Dabengwa, CEO and President, MTN Group, Dr. Nasser Marafih, Group CEO, Ooredoo Group, Marc Rennard, Senior Executive Vice President, Africa, Middle East and Asia, Orange, Abdulaziz A. Alsugair, Chairman and Managing Director, STC Group, Serpil Timuray, CEO, Africa, Middle East and Asia Pacific Region, Vodafone Group and Scott Gegenheimer, CEO, Zain Group. The participating operators have made this commitment in order to provide Internet and mobile broadband access to unserved rural communities and drive down the cost of mobile services for all sections of the population, GSMA said in a statement. They collectively manage 79 mobile network operations across 47 countries in Africa and the Middle East, where many of the unconnected population live in rural areas. The GSMA's position is that telecom regulatory frameworks should encourage flexible commercial sharing arrangements and facilitate access to government-owned assets at preferential rates to help speed up the roll-out of new networks and support the business case to extend mobile networks into rural areas, the GSMA said.

Sun TV Network shed 1.83%. The company said during market hours it is launching an ambitious initiative to monetize its vast content libraries by partnering with several globally active digital distribution platforms that transact with customers over the internet. In this regard, the company has signed contracts with YouTube and iTunes to facilitate the sale of Sun TV proprietary content on a 'pay for view' basis to customers living across the world. Additionally, Sun TV Network has also signed an agreement with Mumbai based Purple IFE recently to deploy the content library for inflight entertainment.

Bata India rose 3.56% to Rs 1,128 after hitting record high of Rs 1,134.65 in intraday trade.

Max India fell 2.23% to Rs 199.65 on profit booking after the stock rose 7.22% in the preceding five trading sessions to Rs 204.20 on 18 March 2014, from a recent low of Rs 190.45 on 10 March 2014.

In the foreign exchange market, the rupee edged higher against the dollar as foreign banks sell dollars, likely for FII clients. The partially convertible rupee was hovering at 61.04, compared with its close of 61.19/20 on Tuesday, 18 March 2014.

Global credit rating agency Standard & Poor's Ratings Services today, 19 March 2014, said that Indian companies are improving their credit profile by selling equity and assets, or using free operating cash flows to reduce debt. The quest to improve credit profiles comes after a weak economy and high interest rates have adversely impacted their cash flows, while companies are also refocusing on cutting debt after years of fast expansion. S&P also said that infrastructure companies with high leverage are also considering selling assets or stakes in subsidiaries to cut down on their debt levels.

The Reserve Bank of India will announce the First Bi-monthly Monetary Policy Statement, 2014-15 on 1 April 2014. Citing price pressures, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.

The next major trigger for the stock market is the outcome of the upcoming Lok Sabha elections. Lok Sabha elections will be held between 7 April 2014 and 12 May 2014 in nine phases. The counting of votes will be take place on 16 May 2014. The term of the current Lok Sabha expires on June 1 and the new House has to be constituted by May 31. Along with the Lok Sabha election, Andhra Pradesh (AP), including the regions comprising Telangana, Odisha and Sikkim will go to polls to elect new assemblies. AP, Odisha and Sikkim assemblies come to end on June 2, June 7 and May 7 respectively.

European stocks edged higher on Wednesday, 19 March 2014, ahead of a policy decision from the US Federal Reserve. Key benchmark indices in France and Germany were up 0.06% to 0.36%. In UK, the FTSE 100 index slipped 0.05%.

The minutes from the Bank of England's most recent meeting showed officials voted unanimously to keep monetary policy on hold. Separately, the UK unemployment rate stood unchanged at 7.2% in the three months to January, as expected, and jobless claims continued to fall in February, according to data from the Office for National Statistics.

Asian stocks edged lower on Wednesday, 19 March 2014, as investors weighed the prospect of further sanctions against Russia and awaited the Federal Reserve's policy statement. Key benchmark indices in Hong Kong, China, Taiwan, Singapore and South Korea were off 0.07% to 0.49%. Key benchmark indices in Indonesia and Japan were up 0.33% to 0.36%.

Japan's trade deficit exceeded estimates in February, underscoring drags on the nation's recovery ahead of a sales-tax increase in April that will weigh on domestic demand. The 800 billion yen ($7.9 billion) shortfall reported by the finance ministry in Tokyo today. Imports expanded 9% from a year earlier, and exports rose 9.8%.

Trading in US index futures indicated that the Dow could advance 12 points at the opening bell on Wednesday, 19 March 2014. US stocks edged higher on Tuesday, 18 March 2014, as housing data bolstered confidence in the economy.

A Commerce Department report showed housing starts were little changed in February after declining less than previously estimated a month earlier, indicating the home-building industry is stabilizing after bad winter weather curbed construction. Permits filed for future projects increased 7.7% to a 1.02 million pace in February, the most since October.

Consumer prices in the US rose slightly in February because of higher food and housing costs, but overall inflation remained quiet, according to the latest government figures.

The Federal Reserve's two-day policy-setting meeting concludes today, 19 March 2014. The central bank is expected to reduce its bond-buying program by another $10 billion and change its 6.5% unemployment threshold to keep its fund rate near zero into 2015. After a monetary policy review, the FOMC on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion.

The US and Europe pledged more sanctions against Russia while Russian President Vladimir Putin, pushing to annex Crimea, said his country didn't intend to further split Ukraine. Russia cemented its claim to Crimea as Putin showed no sign of backing down in the standoff over Ukraine's breakaway Black Sea region, prompting Western leaders to vow further sanctions this week.

Putin on Tuesday, 18 March 2014, signed a treaty to annex Crimea after an overwhelming majority of its citizens on Sunday, 16 March 2014, voted to leave Ukraine. In his prepared remarks, Putin also said he does not want to partition Ukraine.

Leaders of Poland and Estonia, two of the countries on the front line of turmoil in Ukraine, told US Vice President Joe Biden they want a more aggressive stance toward Russia. Biden is on a two-day trip to the region aimed at assuring North Atlantic Treaty Organization allies that the US will support them against any attempt by Russia to encroach on their territory.

Powered by Capital Market - Live News