Markets Tank Heavily; IT, Teck Plunge

The Indian markets tanked heavily on the back of weak global cues coupled with some domestic factors. Yesterday's announcement of the Jan 2012 IIP numbers revised from 6.8% to 1.1% further indicates that the economy is facing a growth crisis. Today, the IT bellwether Infosys also disappointed the street with its dismal March 2012 quarter numbers as well as its weak management guidance for FY13. Among the sectoral indices, IT and Teck plunged heavily, closing down by 8.76% and 6.90% respectively. On the other hand, Healthcare, FMCG, Oil & Gas and Auto closed higher in the positive zone.

The peer Asian markets closed higher, with the 3 major indices, viz. Hang Seng, Nikkei and Shanghai closing higher in the range of 0.35%-1.84%. The markets traded higher after data revealed that the Chinese economy is slowing down more than expected in Q1, which created further speculation among investors that the government might take steps to boost the economy. To this end, the Chinese government made a move of cutting the banks' reserves requirement and will also help smaller business to get financing.

The European markets are trading lower, with the FTSE and CAC and DAX trading lower in the range of 0.50%-1.05% on the back of concerns that the sovereign debt crisis may worsen further.

Dow Jones Futures is currently trading 43 points or 0.33% down at 12907, indicating a negative sentiment in the US markets.

Back home, the IT stocks closed lower and also dragged the market sentiment southwards. Infosys is among the leading index losers, closing down 12.61% to Rs 2403 after the company disappointed the street with its March 2012 quarter results. It reported Net Profit of Rs 2316 crore for the quarter, which is 27% higher on a YoY basis but down 2.4% QoQ. Further, Infosys' guidance for FY13 was below market expectations. As per the management, the revenues are expected to grow at around 8% in FY13 as against the street's expectations of 12%-14%. TCS and Wipro are also trading lower by 5.47% and 4.10% respectively on the back of speculations that they also may show a weak performance in their quarterly results and give a muted growth outlook. The Metals pack also witnessed a lacklustre performance, with stocks like Hindalco and Jindal Steel 2.58% and 2.43% down respectively. Other stocks like Bajaj Auto, HDFC Bank and ONGC closed marginally in the red zone.

On the other hand, Sun Pharma is the leading index gainer, up 2.54% to Rs 586.4. Other Auto stocks like Hero MotoCorp, Tata Motors and Maruti Suzuki closed higher in the range of 0.82%-1.52%. HDFC, BHEL, Cipla and NTPC closed marginally in the green zone.

VTM closed 4.96% up to Rs 120.70 after board considered a stock split and dividend in its next meeting scheduled for Apr 25, 2012. Prime Focus closed 0.98% down to Rs 50.45 after the promoter converted 10 lakh warrants into equity shares.

One should watch out for stocks like CRISIL, Goa Carbon, HCL Tech, ACC, IndusInd Bank, Cairn India, etc., which are going to post their March 2012 quarter results. These stocks may see a price movement.

The market breadth, which indicates the overall health of the market, was negative. Out of the 3266 stocks traded on the BSE, 1791 declined, 1338 advanced and 137 remained unchanged.

For the next week, we expect the markets to remain volatile. The Wholesale Price Inflation (WPI) numbers for March 2012 is due on Apr 16 (Monday) and the RBI's will have its monetary policy meet is scheduled for Apr 17, 2012 (Tuesday). We believe that for the next week, all eyes will be on these two factors as well as on the companies' announcement of their March quarter results, which will further move the market sentiments. We advise investors to remain cautious.