Macro Data And Corporate Earnings To Drive The Market

In the last one week, the markets traded on a flat note with a negative bias. Both the Sensex and Nifty ended with minor loss of 0.44% and 0.63% respectively.

The week started off on a negative note, when we saw the dismal auto sales numbers posted by the auto companies for the month of December 2013. All the leading auto players have witnessed decline in monthly sales on YoY basis. To lead the pack in terms of decline is Tata Motors witnessing a decline of 44% on YoY basis. The trend is being followed by all the PV(Passenger Vehicle) and CV(Commercial Vehicle) makers. Even, the 2-wheeler space witnessed decline in the sales for the month of December 2013. The only exception is TVS Motors, whose sales expanded 2% on YoY basis.

Today we started off the Q3FY14 results. India’s second largest IT company, Infosys has declared better-than-expected results for Q3 FY14. Though the company posted flat revenues on a sequential basis, it saw robust 19.4% growth in its net profits on a sequential basis. Topline grew by 25% and the bottomline went up by 21.4% on a yearly basis for the quarter. The stock closed higher by almost 3% in today’s trade.

Infosys's revenues for Q3FY14 rose to Rs 13026 crore from Rs 10424 crore in Q3FY13. However, the company posted a mere 0.5% growth on a sequential basis. Interestingly, its operating income grew at 14.9% sequentially to Rs 3259 crore from Rs 2837 crore in Q2FY14 due to a 17.1% decrease in its operating expenses. The drop in its operating expenses was mainly due to a 14.9% decrease in selling & marketing expenses and 18.7% lower administrative expenses on a quarterly basis. The net profits increased by 19.4% to Rs 2875 crore in Q3FY14 against Rs 2407 crore in Q2FY14 on a sequential basis. On a yearly basis, the net profit notched up a growth of 21.4%.

On the other hand, The trade deficit data for the December 2013, dropped down to USD 10.14 billion (Rs 62900 crore) from USD 17 billion (Rs 105400 crore) a year ago despite of the lower growth in exports. The exports increased by 3.5% to USD 26.35 billion. The drop in trade deficit is driven by the decline in imports which fell by 15.25% on YoY basis, which were valued at USD 36.49 billion. The imports constituted crude oil import of USD 13.9 billion, which increased by 1.1% during the month as compared to a year ago. While in Rupee term the export increased by 17% to Rs 163129 crore and the import dropped by 3.98% to Rs 225887 crore.

Later in the day (January 10, 2014) we saw the IIP data for the month of November 2013. It came in at -2.1%(on what basis). This is a certainly  a negative news for the market. Hence, on Monday the markets may open on a negative note and going forward in the week it will take cues from the quarterly earnings numbers.