IT, telecom stocks decline

Key benchmark indices were trading with small losses in mid-morning trade after a rangebound trade so far during the session. At 11:25 IST, the barometer index, the S&P BSE Sensex was down 34.73 points or 0.12% at 31,232.83. The Nifty 50 index was down 8.05 points or 0.08% at 9,655.85. Indices hovered in a narrow range as investors maintained caution ahead of key global events.

IT stocks extended previous session's sharp losses on concerns over pricing pressure. Telecom stocks also declined.

Indices edged higher in early trade tracking steady Asian stocks. Stocks soon slipped into the red only to stage recovery in morning trade. Indices once again slipped into the red in mid-morning trade.

The S&P BSE Mid-Cap index rose 0.15%. The S&P BSE Small-Cap index advanced 0.22%. Both these indices outperformed the Sensex.

The breadth, indicating the overall health of the market, was positive. On the BSE, 1,198 shares rose and 1,060 shares declined. A total of 137 shares were unchanged.

IT stocks extended previous session's sharp losses on concerns over pricing pressure. HCL Technologies (down 0.87%), TCS (down 2.31%), Oracle Financial Services Software (down 0.51%), Tech Mahindra (down 0.3%) and Wipro (down 0.71%) edged lower.

Infosys dropped 1.01% after the company clarified after market hours yesterday, 7 June 2017, that the news reports on pricing cuts seen by the IT industry being attributed to the Infosys chief operating officer (COO) are incorrect.

His comments have been misrepresented. The comments made in the media interview refer to cost take out efforts by clients towards reducing their program investments in the 'run' side of business, to reinvest them in newer technologies or the 'change' side of business. Cost take outs by clients do not necessarily translate into an impact on vendor pricing.

There are enough levers available to meet the client demand on cost take-outs without necessarily impacting the pricing. Infosys commentary on pricing is no different from what it had shared with the market earlier. Infosys reiterated that it is not seeing anything new on pricing. This has also been clarified in the webcast of the Morgan Stanley India Summit, the company said.

The clarification was issued after a media report quoted Infosys' COO Pravin Rao saying that the company's clients were asking for 20-30% cut in prices for projects.

Telecom stocks declined. Reliance Communications (RCom) (down 2.33%), Bharti Airtel (down 0.74%), and Idea Cellular (down 0.25%) declined. Tata Teleservices (Maharashtra) rose 0.15%.

Shares of Bharti Infratel fell 1.61%. Bharti Infratel is a provider of tower and related infrastructure and is a unit of Bharti Airtel.

Amtek Auto rose 1.6% after the company said its board will meet on 10 June 2017, to consider the issue of equity capital on preferential basis. The announcement was made after market hours yesterday, 7 June 2017.

Biocon rose 1.27% after the company fixed 17 June 2017 as the record date for issue of bonus shares. The announcement was made after market hours yesterday, 7 June 2017. Biocon had declared 2:1 bonus issue (2 bonus shares for every share held) at its board meeting held on 27 April 2017.

Overseas, most Asian stocks gained ahead of a number of news events with global implications. Later today, elections in the UK will get under way, the European Central Bank will hold its latest meeting and James Comey, the former director of the Federal Bureau of Investigation, will testify on Capitol Hill.

China's May exports rose 8.7% from a year earlier, while imports expanded 14.8%, both beating expectations, official data showed. That left the country with a trade surplus of $40.81 billion for the month, the General Administration of Customs said.

Japan's economy grew at a slower pace than initially estimated in the first quarter. The nation's gross domestic product, the broadest measure of economic activity, grew at an annualized pace of 1.0% from the previous three months, according to government data.

Banks and other financial companies led US stocks slightly higher yesterday, 7 June 2017, snapping a two-day losing streak for the market.

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