Infosys Disappoints Markets; RIL Results Awaited

A lack of triggers in the domestic markets has kept the markets on the edge. The Sensex and the Nifty have closed the week declining by 1.13% and 0.44% respectively.

The Ministry of Statistics and Programme Implementation (MOSPI) has also announced the Consumer Price Inflation (CPI) numbers for March 2013. This came in at 10.39% for March 2013 against 10.91% in February 2013. The number is lower as compared to the indication given by the previous months’ data that inflation might ease to single digits.

On the other hand, we have started off with the results season, Infosys already having announced its results. However, the start of the season has not been a bright one. Revenues of Infosys sequentially increased by a lethargic 1.41% to USD 1,938 million. The operating margin took a massive hit as it reduced QoQ by 6.92% to USD 457 million. Its net profit margin saw some improvement as the net profit grew by 2.30% to USD 444 million. Overall, the result has been below estimates and also unimpressive as compared to its performance in Q3FY13. The outlook Infosys has given for the next year too has disappointed the street. The company guided for a 6-10% revenue growth, which is also lower than NASSCOM's forecast. At the same time, Infosys has not provided for a full year EPS guidance. It provisionally fell by 22.1%, marking its biggest single-day fall since April 4, 2003.

On the global front, monetary and fiscal measures are in full throttle in the US to revive the world's largest economy. The latest US budget figures indicate that the government is on its way to trim the fiscal deficit. On the monetary front, the country’s apex bank, the Federal Reserve (Fed), though divided in opinion, will most likely continue with the current USD 85 billion per month bond buying programme.

The recent minutes of meeting of the Federal Open Market Committee (FOMC) released yesterday (April 10, 2013) indicate that the Fed members are not quite in agreement on the bond-buying programme. Some members want to end the bond-buying immediately, while others want to wait till the end of the year. A few others want to taper out the bond-buying and bring it to an end only if the labour market conditions improve by the end of the year.

Gold prices in India, the world's biggest buyer of the metal, fell below the Rs 29,000 mark, a level keenly watched by importers and jewellers to re-stock gold for weddings and festivals.

The money inflows from FIIs remained weak in the week. FIIs sold equities worth Rs 1,439 crore last week. The DIIs, however, ended the week in green buying equities worth Rs 96 crore. The Infosys results were keenly awaited but they failed to provide a good start to the earnings season. Going forward, the results will be the main trigger that will decide the future course of the markets. Reliance Industries’ results to be announced on Monday are now awaited for its Q4 and FY13 numbers.