No Good Start To The Week In Sight

It wasn’t really a totally unexpected phenomenon. Infy was weighing heavily on the markets mind and its worst fears came true on Friday when the company announced a tepid or rather poor guidance for the future. Its growth rates too weren’t as expected and the result was there for everyone to see. The markets not just tanked but were clobbered beyond recognition with the Sensex hitting the ground with a massive 300 point fall and the Nifty declining by a an equally bad 65 points. Is the market overreacting to Infosys’s performance? The reason to ask this question is quite simple. There is a school of thought which believes that you could forget Infosys but not IT. Is Infosys performance a precursor to what the whole of India Inc would come up with? At least that is what the markets believe right now.

Another set of data that compounded the woes of the market were the IIP numbers that came in later during the day on Friday. Those stats too revealed that the economy was not really moving in a direction that is desirable. The Index was up 0.6% for February 2013. Reportedly it is just the capital goods sector which shows some encouraging signs. All other sectoral numbers are indicating towards a slowdown , and this if not addressed quickly could have rather serious implications.

While the Indian markets reeled under pressures following the reinforcement of fears that the corporate sector is likely to come up with rather mediocre performance in the March quarter (as Infys’ results show) globally it’s been a rather mixed end to the week.  Investors are getting more buoyant n the US. From fears of Cyprus quitting the Euro zone to a poor jobs data that came up and from geopolitical tensions emanating from the Korean region to a poor consumer confidence, the US markets have shrugged it all aside. Frontline indices have gained superbly hitting new highs and that has led to betterment in investor confidence and market atmosphere.

But Europe took to some local cues to end the week in the red. A poor retail sales showing in the US combined with lower gold prices (which hit mining stocks) investors were found getting jittery. Cyprus continues to weigh on the European markets.

How does the day pan out today? Asian markets are not really painting a good picture of what is to come. Except for Malaysia which is barely up by a point or two all Asian markets have opened in the red. A sharply rebounding Yen combined with a weaker than expected growth in China have hit the markets hard in the Asian region. The Nikkei is trading down by almost 133 points while the Shanghai Composite is down half a per cent. The Hang Seng with a 300 point decline is by and far the worst among the lot. Korea, Taiwan and Singapore too have been weak and are showing signs of further deterioration as the day progresses.

After a dismal Friday and with such weak global cues, what can you expect the Indian markets to do today? the SGX Nifty is trading a good 24 point down and this leads us to what could happen at open. The dullness set in by Infosys’ poor showing is likely to continue for today as well. The stock has tanked almost 20 per cent in Friday’s trades and will probably face the same kind of selling pressure even today. this could keep the frontline indices heavily under pressure throughout. There aren’t too many companies coming up with their results today. In fact, CMC is just one which is to be watched out as far as today’s results are concerned. Overall you could see the market open on a negative note and trade in tightly red band trying to take cues as the day progresses.