Markets Down On Infy's Poor Show, Ignore IIP Data

The Indian markets extended their losses in the late afternoon trade, ignoring the better-than-expected IIP numbers for May 2012. Infosys' weak quarterly results have weighed down the markets sentiments despite the IIP numbers that grew by 2.4% in May 2012. One of the main drivers of growth in May IIP is the growth seen in the eight core sectors. Globally too, the markets are trading negative.

The European markets continued to open on a negative note on the back of weak global sentiments after the Fed meeting dashed hopes of fresh risk-asset-boosting stimulus in the near term.

The Asian markets are now significantly down. Japan's policy meet and no stimulus measures to boost the US economy led to the down fall. The investors are majorly concerned with the slowing down of the growth across the major economies.

Of the Sensex shares, Infosys is leading with major losses and is down by almost 10% on the back of poor results and weak guidance for the full year (FY13). The company has reduced its dollar revenue guidance from around 8%-10% to 5% for the current fiscal. Other IT stocks such as TCS and Wipro are also significantly down by 2.45% and 3.585 respectively. Among the few gainers are Hero MotoCorp, HUL and Maruti Suzuki, up by 1%, 0.50% and 0.23% respectively.

In individual stocks, Castrol India has risen by 1.5% to Rs 560 after the company's announcement of a bonus issue. Cairn India has risen by 0.85% to Rs 311.80 on the BSE as the US crude futures traded near the highest level in 2 days. This was after the country's crude stockpiles fell last week, countering concerns that the global fuel demand will falter as manufacturing stagnates in Europe.

The market breadth, which indicates the overall health of the market, remains negative. On the BSE, 1633 shares have declined, 864 shares have advanced and 114.shares remain unchanged.

We believe that the markets will continue to remain under pressure from the global markets and a foreseeably weak earnings season.