IT stocks edge higher as Accenture raises revenue, EPS forecast

High volatility was witnessed as key benchmark indices trimmed losses in morning trade after extending initial losses. The market breadth indicating the overall health of the market turned negative from positive. The barometer index, the S&P BSE Sensex was currently off 106.78 points or 0.38% at 27,789.19. In overseas markets, Chinese stocks dropped amid disappointment the government hasn't taken stronger steps to stimulate a slowing economy and worries that startup stocks are still too expensive.

IT stocks edged higher after business consulting firm Accenture yesterday, 25 June 2015, raised its full-year revenue as well as earnings per share (EPS) forecast at the time of announcing its Q3 May 2015 results after trading hours in India yesterday, 25 June 2015. Bank stocks edged lower after the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report (FSR) June 2015 published yesterday, 25 June 2015, that while risks to India's banking sector, as reflected by the Banking Stability Indicator and Map, have moderated marginally since September 2014, concerns remain over the continued weakness in asset quality indicated by the rising trend in stressed advances ratio of scheduled commercial banks (SCBs), especially of public sector banks (PSBs).

Foreign portfolio investors (FPIs) bought shares worth a net Rs 280.21 crore yesterday, 25 June 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 8.45 crore yesterday, 25 June 2015, as per provisional data released by the stock exchanges.

In overseas stock markets, Chinese stocks led losses for Asian markets. US stocks edged lower yesterday, 25 June 2015, as lack of resolution between Greece and its creditors weighed on investor sentiment.

At 10:16 IST, the S&P BSE Sensex was down 106.78 points or 0.38% at 27,789.19. The index fell 173.83 points at the day's low of 27,722.14 in morning trade. The index gained 25.89 points at the day's high of 27,921.86 in early trade.

The CNX Nifty was down 27.60 points or 0.33% at 8,370.40. The index hit a high of 8,408.55 in intraday trade. The index hit a low of 8,352.50 in intraday trade.

The BSE Mid-Cap index was down 21.89 points or 0.2% at 10,667.86. The decline in the index was lower than Sensex's decline in percentage terms. The BSE Small-Cap index was up 10.68 points or 0.1% at 11,119.98, outperforming the Sensex.

The market breadth indicating the overall health of the market turned negative from positive in morning trade. On BSE, 972 shares fell dropped and 798 shares rose. A total of 79 shares were unchanged.

IT stocks edged higher after business consulting firm Accenture yesterday, 25 June 2015, raised its full-year revenue as well as earnings per share (EPS) forecast at the time of announcing its Q3 May 2015 results after trading hours in India yesterday, 25 June 2015. HCL Technologies (up 1.68%), Infosys (up 1.38%), Wipro (up 0.89%), MindTree (up 1.21%), CMC (up 0.46%), Tech Mahindra (up 0.46%) and TCS (up 0.39%) edged higher. Oracle Financial Services Software (down 0.28%) edged lower.

Accenture reported net revenue of $7.8 billion for Q3 May 2015, an increase of 0.4% in US dollars and 10% in local currency over the same period last year. Net profit for the quarter was $850 million, compared with $882 million for the third quarter last year. Excluding the after-tax impact of the pension settlement charge, net profit for the third quarter of fiscal 2015 was $889 million.

Accenture expects net revenue to be in the range of $7.45 billion to $7.70 billion for Q4 August 2015. This range assumes a foreign-exchange impact of negative 10% compared with the fourth quarter of fiscal 2014. For fiscal 2015 (year ended 31 August 2015), the company now expects net revenue growth in local currency to be in the range of 9% to 10%, compared with 8% to 10% previously. Accenture's business outlook for the full 2015 fiscal year now assumes a foreign-exchange impact of negative 7.5% compared with fiscal 2014. The previous foreign-exchange assumption was negative 8%.

Accenture now expects diluted GAAP EPS to be in the range of $4.67 to $4.72 for the full 2015 fiscal year, including the pension settlement charge, compared with $4.61 to $4.71 previously. Excluding the pension settlement charge of $0.06 per share in the third quarter, the company now expects adjusted EPS to be in the range of $4.73 to $4.78, compared with $4.66 to $4.76 previously.

Bank stocks edged lower after the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report (FSR) June 2015 published yesterday, 25 June 2015, that while risks to India's banking sector, as reflected by the Banking Stability Indicator and Map, have moderated marginally since September 2014, concerns remain over the continued weakness in asset quality indicated by the rising trend in stressed advances ratio of scheduled commercial banks (SCBs), especially of public sector banks (PSBs).

Among public sector banks, Oriental Bank of Commerce (down 3.31%), Union Bank of India (down 2.3%), Bank of India (down 2.41%), Punjab National Bank (down 1.52%), IDBI Bank (down 1.83%), State Bank of India (down 1.19%), United Bank of India (down 1.03%), Bank of Baroda (down 1.52%) and Indian Overseas Bank (down 1.29%) edged lower. Central Bank of India (up 0.14%) edged higher.

Shares of private sector banks edged lower. Kotak Mahindra Bank (down 1.61%), Yes Bank (down 0.99%), Axis Bank (down 0.8%) and HDFC Bank (down 0.67%) edged lower.

The RBI said in its FSR that macro stress tests suggest that current deterioration in the asset quality of SCBs may continue for few more quarters and PSBs may have to bolster their provisions for credit risk from present levels, to meet the 'expected losses' if macroeconomic environment were to deteriorate under assumed stress scenarios. However, capital to risk weighted assets ratio (CRAR) of SCBs, at system level, was observed to remain above the regulatory minimum even under adverse macro-economic conditions assumed in these tests.

The report notes that while the regulatory move towards encouraging greater market access and market discipline will help the development of domestic financial markets, the banking sector, especially the PSBs will be expected to continue to shoulder the needs of the accelerating growth in the economy. In this context, the policy initiatives for improving the governance and management processes at public sector banks become significant.

ICICI Bank was off 2.08% at Rs 308.95. The stock hit a high of Rs 315.40 and a low of Rs 308.85 so far during the day. ICICI Bank after market hours yesterday, 25 June 2015, announced a reduction of 5 basis points (bps) in its base rate to 9.70% per annum (pa) from 9.75% with effect from 26 June 2015. With effect from 1 July 2010, interest rates on new loans and advances, including consumer loans, are determined with reference to the bank's base rate, ICICI Bank said.

IndusInd Bank was up 0.01% at Rs 864.85. The stock hit a high of Rs 873.40 and a low of Rs 855.45 so far during the day. IndusInd Bank after market hours yesterday, 25 June 2015, announced that the Finance Committee of the bank yesterday, 25 June 2015, inter-alia passed the resolution authorising the opening of the QIP yesterday, 25 June 2015. The floor price for the QIP has been fixed at Rs 821.54 per share. IndusInd Bank said that the bank may offer a discount of up to 5% on the floor price.

Meanwhile, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report (FSR) June 2015 published yesterday, 25 June 2015, that India's relatively stronger macroeconomic fundamentals in terms of growth, inflation, current account and fiscal deficits provide a reasonable degree of resilience to Indian financial system in the event of spill-over effects from global factors. However, with the continued uncertainty over global growth and in the absence of effective international monetary policy coordination, there can be no room for complacency, the report stated. The FSR reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability, as also the resilience of the financial system.

The latest Financial Stability Report notes that there has been significant improvement in India's macroeconomic environment and going forward, economic performance is expected to be better. External vulnerability has reduced and progress has been made with regard to fiscal consolidation. While foreign portfolio flows to India have been strong during the past year, unexpected changes in monetary policy in advanced economies (AEs) may lead to slowdown/reversal of foreign portfolio flows, with implications for segments of financial markets, according to the report. According to the FSR, India is better prepared to deal with the volatility, as compared to previous episodes.

According to the FSR report, concerns emanating from rapid rise in algorithm trading in recent years highlight the need for caution for India's securities markets, while measures have been taken to address the same. Significant steps have been taken to tighten the regulations dealing with illegal money-raising activities and insider trading, and also to strengthen the risk management systems at depositories.

Meanwhile, the India Meteorological Department (IMD) said in its daily monsoon update issued yesterday, 25 June 2015, that the southwest monsoon has been further advanced into remaining parts of north Arabian Sea, Gujarat state, Madhya Pradesh, Uttar Pradesh, Himachal Pradesh, Uttarakhand, Punjab, East Rajasthan, entire Haryana, Chandigarh & Delhi and some parts of West Rajasthan. The southwest monsoon was vigorous over East Rajasthan, Gujarat Region and Saurashtra & Kutch and active over Jharkhand, Uttarakhand, Haryana, Chandigarh & Delhi, Himachal Pradesh, West Madhya Pradesh, Madhya Maharashtra and South interior karnataka during past 24 hours until 8:30 IST, the IMD said.

For the country as a whole, the cumulative rainfall during this year's monsoon season was 24% above the Long Period Average (LPA) until 24 June 2015. Region wise, the southwest monsoon was 52% above the LPA in Central India, 32% above the LPA in South Peninsula, 4% above the LPA in East & Northeast India and 5% below the LPA in Northwest India until 24 June 2015.

The IMD expects considerable decease in rainfall activity over Northwest India, central India and parts of Peninsular India during next 15 days. The IMD expects rainfall activity to increase and expects rains to be above normal over Odisha, Jharkhand, Gangetic West Bengal, Chhattisgarh, north Andhra Pradesh until 30 June 2015. The IMD expects near-normal rainfall over parts of east and northeast India during first ten days of July.

The June-September southwest monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.

In overseas stock markets, Asian stocks edged lower today, 26 June 2015, as dwindling hopes of a Greek deal weighed on sentiment. Key indices in China, Japan, Hong Kong, Singpore and Taiwan were off 0.19% to 4.06%. Key indices in South Korea and Indonesia were up 0.14% to 0.38%.

US stocks closed lower yesterday, 25 June 2015, failing to hold initial gains, as lack of resolution between Greece and its creditors weighed on investor sentiment.

In Europe, Greece and its international creditors remain in deadlock over its debt crisis despite a series of top-level meetings. Prime Minister Alexis Tsipras failed to reach a deal with Greece's lenders, then a meeting of European finance ministers broke up without progress.

Greece needs a deal to unlock new financing ahead of a 1.54 billion euro ($1.75 billion) debt payment due to the International Monetary Fund (IMF) on 30 June 2015. On the same day, Greece's international bailout expires. A default on its international creditors-the IMF and other eurozone governments-could force Greece into a messy exit from the euro.

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