Markets open flat post weak economic data; Infosys down 1% on Q4 results

Benchmark indices opened on a flat note tracking weak economic data. The March retail inflation rose to highest level in 5 months of 3.81% while the February IIP contracted to 1.2% from 3.3% in January.  

IT major Infosys also declared its March quarter results which was in line with the street expectations but the revision of FY18 guidance for the fourth time to 6.5-8.5% in constant currency terms and muted outlook kept the momentum tepid.

 

Globally, geopolitical tensions and Donald Trump’s comment on dollar also affected the sentiment.  In an interview with the Wall Street Journal, Trump said the dollar is getting too strong and that would eventually hurt the economy and he would like to see interest rates stay low.

 

At 9:17 am, the S&P BSE Sensex was trading at 29,622 down 21 points, while the broader Nifty50 was ruling at 9,201 down 1 point.

 

In the broader market, BSE Midcap was down 0.08% and BSE Smallcap gained 0.2%. 

"The 9,280 has held firm so far, forcing retreats on every attempt. This suggests that 9,170 could crack, but that should at best ease oscillators a bit, and considering the strength of directional moving indicators, 9,500 objective could then become more certain. Alternatively, inability to float above 9,170 could see prices sliding systematically but slowly feeling for support from 9,070 or 8,900. Favoured view, however does not expect such down moves to sustain," said Geojit Financial Services in a technical note.

 

On Wednesday, foreign portfolio investors (FPIs) bought shares worth a net Rs 580.70 crore, while Domestic institutional investors (DIIs) also bought shares worth a net Rs 701.12 crore, provisional data available with BSE showed.

Infosys posts Q4 results 

Infosys fell over 1% after it released its March quarter results earlier in the day, which was in line with the market expectations with consolidated net profit at Rs 3,603 crore versus Rs 3,708 crore in the previous quarter.

 

The company Board has identified $2 bn to be paid to shareholders via dividend, share buyback. FY17 revenue crossed $10 billion, which was the first for the company.

 

The FY18 guidance was below street expectations; downgraded for the fourth time. It sees revenue growth of 6.5-8.5% in constant currency terms, and operating margin at 23-25%. The IT major has already revised its guidance for 2016-17 three times, citing global macroeconomic situations.

 

Infosys also announced that the company has appointed Ravi Venkatesan as Co- Chairman of the Board.

 

Weak economic data

 

Higher fuel costs drove up India’s retail inflation to its highest level in five months in March, data showed, vindicating a central bank decision last week to keep its policy rate on hold amid concern about price pressures. Consumer prices rose by an annual 3.81%, their fastest pace since October 2016, compared with February's 3.65%, the Ministry of Statistics said on Wednesday.

 

Industrial output contracted 1.2% in February from a year earlier, driven down by a contraction in consumer and capital goods production, government data showed on Wednesday. The factory output, measured in terms of Index of Industrial Production (IIP), had expanded by a revised 3.3% in January mainly due to a bounce-back in figures in the consumer and capital goods sectors.

 

Global Markets

 

The US dollar and Treasury yields stumbled on Thursday after President Donald Trump said he preferred the Federal Reserve keep interest rates low as the dollar is getting too strong, and said he wouldn't label China a currency manipulator.

 

But Asian stocks fared better than Wall Street, which declined following the comments and closed between 0.3% and 0.5% lower.

 

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.15% in early trade. Most markets in the region will be closed on Friday for the Good Friday public holiday.

 

Japan's Nikkei slumped 1% while Australian stocks fell 0.7%, on track to post a 0.5% gain for the week.