Weakness prevails on global cues

Weakness prevailed in afternoon trade as European markets opened lower and Asian stocks continued to hover in the red. Sentiment in the domestic market turned weak after shares of IT major Infosys tumbled after a tepid revenue growth guidance for the year ending 31 March 2014. Infosys fell more than 20%. The barometer index, the S&P BSE Sensex, was down 310.69 points or 1.68%, off close to 106 points from the day's high and up about 38 points from the day's low. The market breadth was weak.

Index heavyweight and cigarette maker ITC extended initial gains. Another index heavyweight Reliance Industries (RIL) pared gains. Idea Cellular fell after the Delhi High Court today, 12 April 2013, asked telecom companies Vodafone India and Idea Cellular not to add new customers for their 3G services in circles where they do not have licences to offer that service.

The market tumbled in early trade as Infosys slumped after Q4 results. Weakness continued on the bourses in morning trade. The market remained weak in mid-morning trade. The market extended intraday losses in early afternoon trade. Weakness prevailed in afternoon trade as European markets opened lower and Asian stocks continued to hover in the red.

Foreign institutional investors (FIIs) bought shares worth a net Rs 36.63 crore on Thursday, 11 April 2013, as per provisional data from the stock exchanges.

At 13:17 IST, the S&P BSE Sensex was down 310.69 points or 1.68% to 18,231.51. The index slumped 349.02 points at the day's low of 18,193.18 in early trade, its lowest level since 10 April 2013. The index fell 204.29 points at the day's high of 18,337.91 in early trade.

The CNX Nifty was down 73.55 points or 1.31% to 5,520.45. The index hit a low of 5,494.90 in intraday trade, its lowest level since 10 April 2013. The index hit a high of 5,544.50 in intraday trade.

The S&P BSE Mid-Cap index was down 0.38% and the S&P BSE Small-Cap index was down 0.56%. Both these indices outperformed the Sensex.

The market breadth, indicating the overall health of the market, was weak. On BSE, 1275 shares fell and 809 shares rose. A total of 131 shares were unchanged.

Among the 30-share Sensex pack, 15 stocks gained while rest of them fell. Wipro (down 4.61%), M&M (down 1.3%), Sterlite Industries (India) (down 1.3%), TCS (down 1.26%), Coal India (down 0.95%), Tata Motors (down 0.95%), Bharti Airtel (down 0.82%), GAIL (India) (down 0.7%) and Larsen & Toubro (down 0.7%), edged lower from the Sensex pack.

Hindustan Unilever (up 1.40%), Hindalco Industries (up 1.33%), Bajaj Auto (up 0.96%), Bhel (up 0.92%), ONGC (up 0.64%), Cipla (up 0.63%), Dr. Reddy's Laboratories (up 0.54%) and HDFC Bank (up 0.46%), edged higher from the Sensex pack.

Infosys slumped 20.59%. The stock declined on high volumes. On BSE, 11.52 lakh shares changed hands in the counter compared with average daily volume of 84,173 shares in the past one quarter. Infosys' consolidated net profit as per International Financial Reporting Standards (IFRS) rose 1.1% to Rs 2394 crore on 0.3% growth in revenue to Rs 10454 crore in Q4 March 2013 over Q3 December 2012. Net profit rose 13.3% to Rs 9421 crore on 19.6% growth in revenue to Rs 40352 crore in the year ended March 2013 (FY 2013) over the year ended 31 March 2012 (FY 2012). The company announced the results before market hours today, 12 April 2013.

The company has forecast a tepid 6% to 10% growth in revenue in both rupee terms and dollar terms for the year ending 31 March 2014 (FY 2014). The revenue growth outlook is lower than industry body Nasscom's projection of 12% to 14% growth in IT exports in the current fiscal year. Infosys has not given full year earnings guidance this time. Infosys had earlier stopped offering quarterly guidance in July 2012.

Infosys and its subsidiaries added 56 clients during the quarter. The company added 8,990 employees on gross basis during the quarter. There was a net addition of 1,059 employees during the quarter.

Infosys said it has decided to set aside up to $100 million to invest in products, platforms and solutions ideas in line with Infosys 3.0 strategy.

Infosys had liquid assets including cash and cash equivalents, current available-for-sale financial assets, investment in certificates of deposits and government bonds, at Rs 23958 crore as on 31 March 2013, higher than Rs 22501 crore as on 31 December 2012.

Commenting on the financial performance, S. D. Shibulal, CEO and Managing Director, Infosys said: "Global economic uncertainties remain challenging for the IT industry. We are progressing well on our strategic direction of building a high-quality company which is relevant to our clients. We are making all the investments necessary to differentiate ourselves in the market place while positioning ourselves as a partner of choice for our clients."

Rajiv Bansal, Chief Financial Officer, Infosys said: "The global currency market continues to be volatile reflecting the uncertain economic environment. Our hedging strategy helps us to minimize the volatility impact. We have a healthy balance sheet with our cash and cash equivalents at $4.4 billion."

Index heavyweight Reliance Industries (RIL) rose 0.18% at Rs 772.50. The scrip hit high of Rs 780.60 and a low of Rs 765.25 so far during the day. RIL announces Q4 results on 16 April 2013.

Shares of Reliance Communications rose 0.53%. RIL's telecom unit Reliance Jio Infocomm and Reliance Communications (RCom) on 2 April 2013 announced the signing of a definitive agreement for approximately Rs 1200 crore as one time indefeasible right to use (IRU) fees for sharing RCom's nationwide inter-city fiber optic network infrastructure. Reliance Jio Infocomm will utilize multiple fiber pairs across RCom's 1.2 lakh kilometres inter-city fiber optic network to provide a robust and future proof backbone for rolling out its state-of-the-art 4G services. As per the agreement, RCom will in turn have reciprocal access to optic fiber infrastructure to be built by Reliance Jio Infocomm in the future.

The agreement provides for joint working arrangements to be put in place immediately for upgradation of the optic fiber network to ensure seamless delivery of next generation services.

Index heavyweight and cigarette major ITC rose 2.58% to Rs 292.60 on defensive buying. The scrip hit high of Rs 295.10 and a low of Rs 286.05 so far during the day. The stock had hit record high of Rs 310.75 on 4 February 2013. The government raised the excise duty on cigarettes by about 18% on all cigarettes except cigarettes of length not exceeding 65 mm in Union Budget 2013-14, which was unveiled on 28 February 2013.

Idea Cellular fell 2.02%. The Delhi High Court today, 12 April 2013, asked telecom companies Vodafone India and Idea Cellular not to add new customers for their 3G services in circles where they do not have licences to offer that service.

The ruling comes a day after the Supreme Court passed the same order for Bharti Airtel, India's leading telecom services provider.

The High Court also asked the government not to take coercive steps against the telcos.

Bharti Airtel declined 0.80%. The Supreme Court on Thursday, 11 April 2013, said that Bharti Airtel cannot add new 3G customers in seven zones where it does not own the airwaves and offers the services through pacts with other carriers, pending a final ruling in the dispute. The apex court said that Bharti can continue 3G services in these zones for its existing customers.

The court was hearing an appeal by Bharti challenging a government ban on 3G pacts between carriers. Bharti, Vodafone India and Idea Cellular currently offer 3G services outside their licensed zones through pacts with each other. The telecommunications ministry had said that the 3G roaming pacts are illegal and had asked the carriers to end the pacts immediately and also imposed penalties on them.

The Department of Telecommunications (DoT) had earlier this month slapped penalties of Rs 550 crore on Vodafone and Rs 300 crore on Idea Cellular for offering 3G services in circles where they did not have licences. The DoT had also slapped a Rs 350 crore fine on Bharti Airtel. The Supreme Court on Thursday, 11 April 2013, asked the DoT not to take coercive steps against the telco to recover this penalty. The apex court will hear the case again after four weeks.

Among other telecom stocks, Tata Teleservices (Maharashtra) (down 3.21%), MTNL (down 1.45%) and Reliance Communications (down 0.6%), edged lower.

Shares of power generation companies declined. JSW Energy (down 1.98%), Torrent Power (down 1.75%), Lanco Infratech (down 1.23%), GMR Infrastructure (down 0.94%), Reliance Power (down 0.54%), Adani Power (down 0.44%) and NTPC (down 0.07%), edged lower.

However, Tata Power was up 0.58% at Rs 94.60.

The index of industrial production rose 0.6% in February 2013, data released by the government today, 12 April 2013, showed. Manufacturing sector recorded a growth of 2.2%. The mining sector registered a decline of 8.1% and electricity sector declined 3.2%. As per use-based classification, production of basic goods declined 1.8% and that of intermediate goods fell 0.7%. Capital goods production rose 9.5%. Production of consumer non-durables rose 2.9% whereas that of consumer durables shrunk 2.7%.

Industrial production rose 0.9% during the period April 2012 to February 2013.

The combined consumer price inflation for rural and urban India stood at 10.39% in March 2013, lower than 10.91% in February 2013, another data showed. Inflation under the category 'food and beverages' stood at 12.42%, the data showed.

The upside on the domestic bourses may be capped as reduction of promoter stake to meet the Securities & Exchange Board of India (Sebi) mandated minimum public shareholding of 25% for private companies and 10% for state-run firms will result in supply of equity in the market over the next few months. As per the Sebi mandated minimum public shareholding rule, private-sector companies must cut founders' stake to adhere to the rules by 30 June 2013, while the deadline for state-run firms is 31 August 2013. PSU divestment will also add to share sale glut in FY 2014. The government has set a target of Rs 40000 crore from divestment of government stake in state-run firms and Rs 14000 crore from divestment of stake in non-government companies for FY 2014.

The Q4 March 2013 corporate earnings season began today, 12 April 2013. Reliance Industries (RIL) announces Q4 results on 16 April 2013. TCS announces Q4 results on 17 April 2013. IndusInd Bank announces Q2 results on 18 April 2013. Wipro announces Q4 results on 19 April 2013. Cairn India announces Q4 results on 22 April 2013. UltraTech Cement announces Q4 results on the same day.

HDFC Bank announces Q4 results on 23 April 2013. Axis Bank will announce its Q4 March 2013 results on 24 April 2013. ICICI Bank and Maruti Suzuki unveil Q4 results on 26 April 2013. IDFC announces Q4 results on 1 May 2013. HDFC announces Q4 results on 8 May 2013. Ranbaxy announces Q1 March 2013 results on the same day. Dr. Reddys Laboratories announces Q4 results on 14 May 2013.

The government will unveil data on the wholesale price index (WPI) for March 2013 on Monday, 15 April 2013. WPI inflation is projected to ease to 6.4% in March 2013 from 6.84% in February 2013, as per the median estimate of a poll of economists carried out by Capital Market. WPI inflation had edged up to 6.84% in February 2013 from 6.62% in January 2013.

The India Meteorological Department will issue its initial forecast of 2013 southwest monsoon in this month.

The Reserve Bank of India (RBI) Governor D. Subbarao on 6 April 2013 said that the high fiscal deficit is a problem because it exacerbates inflation and impedes monetary policy transmission. The RBI will announce the Monetary Policy Statement 2013-14 on 3 May 2013. The RBI cut its key policy rate viz. the repo rate by 25 basis points to 7.5% after a mid-quarter monetary policy review on 19 March 2013. The key macroeconomic priorities are to raise the growth rate, restrain inflation pressures and mitigate the vulnerability of the external sector, RBI said at that time. Even as the policy stance emphasises addressing the growth risks, the headroom for further monetary easing remains quite limited, the RBI said. The RBI said it will continue to actively manage liquidity through various instruments, including open market operations (OMO), so as to ensure adequate flow of credit to productive sectors of the economy.

On the political front, the Congress led UPA government has been reduced to a minority government, with DMK removing support to the government in March this year citing differences on the issue of atrocities on Tamils in Sri Lanka. Earlier, the Trinamool Congress withdrew support to the government in September last year as it opposed economic reforms. The Samajwadi Party (SP) along with its regional rival in Uttar Pradesh Bahujan Samaj Party (BSP) provide outside support to the UPA government. SP has 22 MPs in Lok Sabha and BSP has 21 MPs.

The finance ministry in October 2012 announced a five-year plan to cut fiscal deficit. The government hopes to reduce the fiscal deficit to 3% by March 2017.

The second half of the Budget session of the Parliament begins on 22 April 2013. The government has lined up a number of key bills for consideration and passing during the Budget session of the parliament, which include The Forward Contracts (Regulation) Amendment Bill, 2010, The Pension Fund Regulator and Development Authority Bill, 2011, The Land Acquisition, Rehabilitation and Resettlement Bill, 2011, The National Food Security Bill, 2011 and The Insurance Laws (Amendment) Bill, 2008. The Budget Session of the Parliament ends on 10 May 2013.

Assembly elections will be held in Karnataka on 5 May 2013 and the counting of votes and results of the election will be declared on 8 May 2013.

European shares were trading lower in early trade on profit booking after a four-day winning streak. Key benchmark indices in UK, France and Germany were down by 0.29% to 0.63%.

Most Asian stocks fell on Friday after recent gains. Key benchmark indices in China, Hong Kong, South Korea, Singapore, Japan and Taiwan fell by 0.33% to 1.31%. Indonesia's Jakarta composite rose 0.32%.

A report showed Singapore's economy unexpectedly contracted last quarter as companies grappled with a labor shortage and exports faltered amid an uneven global recovery.

Trading in US index futures indicated that the Dow could fall 24 points at the opening bell on Friday, 12 April 2013. US stocks on Thursday notched another day of record gains as some retailers reported improved sales, though tech stocks tumbled after a report showed a sharp decline in PC demand. For the S&P 500, it was the index's second straight day of record close. For the Dow Jones Industrial Average, it was the index's third straight record finish.

The number of Americans filing new claims for unemployment benefits fell more than expected last week, easing fears of a marked deterioration in labor market conditions after a surprise stumble in job growth in March. Initial claims for state unemployment benefits dropped 42,000 to a seasonally adjusted 346,000, the Labor Department said on Thursday.

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