It is a day with being called as the day of three I's —the Infosys results, the IIP shock and Italy worried to deal with. While Infosys results and expectations lived up to the tradition of providing conservative guidelines, the market now seems
Selling pressure triggerd across the sectors as the domestic market was disappointed on weak Infosys results and sluggish May industrial output. Global cues too was dampener as heavy sell off was seen in early trade of European markets
The benchmark indices continued to be weak in the afternoon trade. Selling pressure triggerd across the sectors as the domestic market was disappointed on weak Infosys results and sluggish May industrial output. Global cues too was dampener as heavy sell off was seen in early trade of European markets.
The BSE IT index has underperformed all other sectoral indices; it was down over 3% on the back of below expectation Infosys Q1 results. The BSE realty, auto, capital goods, metal and bankex were down 1-2%.
Bangalore-based Infosys, the first to kick off results for India's nearly $60 billion IT sector, also forecast tepid sales growth for the year ending March 2012.
"Infosys has a history of generally beating market expectations. So, the street is disappointed," said Gajendra Nagpal, CEO of Unicon Financial in New Delhi. "Also, the market may now bring down its expectations from the entire IT pack."
Infosys, founded in 1981 by seven engineers with $250 borrowed from their spouses, reported a net profit of 18.2 billion rupees ($408.5 million) versus 16 billion rupees a year ago.
This compares with a Reuters poll forecast for net profit of 18.81 billion rupees for Infosys , whose clients include Goldman Sachs , BT Group and BP .
Indian technology firms have seen a shake-up in recent months. In January, smaller rival Wipro replaced the chiefs of its key outsourcing business after struggling to keep up with peers. [ID:nSGE70J055]
Infosys, which boasts higher profit margins versus local and global peers, said its margins could decline this year, mainly due to a volatile local currency.
"Currency volatility continued to be a challenge," chief financial officer V. Balakrishnan told reporters in Bangalore.
Infosys, larger rival Tata Consultancy Services , and No. 3 Wipro have all stepped up hiring in the past few months, reflecting strong demand from clients.
However, a possible appreciation of the rupee and pay increases for employees as they battle the likes of IBM and Accenture for orders and staff, will be key concerns for export-oriented firms.
"There is pressure on margins. That is a combination of both cost pressures and the rupee. Even the outlook is below market expectation," said Nitin Jain, Singapore principal investment manager at Kotak Mahindra's fund management unit.
Meanwhile on the global front, European markets tumbled over 2% in the opening trade due to rising concerns of Italy debt crisis. Italy debt-to-GDP ratio of 120%, which is second only to Greece within the EU and Italy faces 175 billion euros in debt maturities this year and has 1.6 trillion euros of bonds outstanding, the world’s third-largest debt pile after the US and Japan.
Infosys informed the market of its Quarter Ended June 30, 2011 Results . Revenues. Revenues were `7485 crore for the quarter ended June 30, 2011;QoQ growth was 3.2%; YoY growth was 20.8% Net profit after tax was `1722 crore for
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