Sensex, Nifty close to be range-bound: Friday closing report

Nifty to be subdued for a few days before making its next move

The Indian market opened Friday weak, following a huge decline in the US market yesterday, and traded in the negative for the entire session.

The BSE 30-share Sensex opened at 22,642 while the NSE 50-share Nifty opened at 6,758. Both Sensex and Nifty hit their respective low at the beginning of the noon session at 22,527 and 6,743, respectively. After this they tried edging higher. At the end of the session the benchmark hit their day’s high at 22,679 and 6,789. Sensex closed at 22,629 (down 86 points or 0.38%), while Nifty closed at 6,776 (down 20 points or 0.30%). The NSE recorded a lower volume of 98.47 crore shares.

The stock market will be closed on Monday, 14 April 2014, on account of Dr Babasaheb Ambedkar Jayanti.

The Indian government will unveil industrial production data for February 2014 later in the day after market hours. India's merchandise exports fell 3.15% at $29.57 billion in March 2014 over March 2013, data released by Ministry of Commerce and Industry today. Imports declined 2.11% at $40.08 billion in March 2014 over March 2013. The trade deficit widened to $10.50 billion in March 2014, from $10.4 billion in March 2013.

After market hours, industrial production data were released. Industrial production again slipped into negative territory and contracted 1.9% in February 2014 due to poor performance in manufacturing, especially capital goods. Factory output as measured by the index of industrial production (IIP) showed a decline of 0.1% during the 11-month period from April to February, compared with growth of 0.9% in the corresponding period a year earlier.

Reserve Bank of India (RBI) governor Raghuram Rajan on Thursday said in a media interview in Washington that India is prepared for potential financial fallout if the US Federal Reserve increases interest rates before April 2015. The Fed is "mostly" right in how it is managing monetary policy, Rajan said during a panel discussion at George Washington University, adding the central bank needs to improve communications because the measures it's taking now will affect what emerging markets do in the future. Still, he said he doesn't expect a US rate increase by April 2015.

Back home software stocks namely, TCS, Wipro, Infosys, in the Sensex 30 pack closed in the positive. According Nomura, software stocks will see strong start to the year with likely first half annual contract value growth of 15% or above.

Jaiprakash Power was among the gainers in ‘A’ group on the BSE (up 7.17%) after it was reported that major repair work at Vishnuprayag is complete and the plant should restart shortly in next 48 hours. Last June thanks to heavy rains, excessive silt, boulders and other materials in the Alakananda river the barrage operations and power generation, of its 400-MW Vishnuprayag hydropower plant was shut down. After rallying yesterday Adani Enterprises was the lead loser in the ‘A’ group on BSE.

US indices closed deeply in the red on Thursday. A government report on Thursday showed the fewest number of Americans filed applications for unemployment benefits last week, pointing to more progress in the labour market.

Except for Jakarta Composite (1.07%) all the other Asian indices closed in the negative. Nikkei 225 (2.38%) was the top loser.

A report today showed Chinese consumer prices rose 2.4% in March from a year earlier, after gaining 2% in February. The nation's producer price index retreated 2.3% following the previous month's 2% drop.

European indices were trading in the red. US Futures were trading lower.


IT companies may get a good start in the first half of the FY14

Nomura is optimistic on HCL, TCS, Tech Mahindra

Global Outsourcing ACV of $5.7bn was up by 14% on year-on-year (y-o-y) basis, according to a Nomura Report. The IT sector also reported a better y-o-y traction of Europe, Middle East and Africa (EMEA) and Asia Pacific (APAC), while USA tractions showed decline. Although the ACV of restructuring deals was down by 15%, its momentum was up by 24% y-o-y.

The IT sector report stated that the Information Technology Outsourcing (ITO) sector was doing well. It said “ITO 1Q ACV of USD4.3bn was up 29% y-y on substantial new scope ACV. The number of ITO contracts awarded also increased significantly, registering 21% y-y growth. Within ITO deals, the highest delta has come from Infrastructure services outsourcing where the value of the contracts was nearly double the average for the past 8 quarters, while ADM, Network services and ADM + Infrastructure remained flat.”

According to the report, the five main IT companies in India, Infosys (IFO), Tata Consultancy Services (TCS), Wipro (WPRO), Cognizant (CTSH) and HCL Technologies (HCLT) were among the top ten global providers in both ITO and Business Process Outsourcing (BPO).

The reports stated that while the ITO was rising, the ACV of the BPO was declining. It said “BPO 1Q ACV of USD1.4bn was down 16% y-y. Even on trailing 12 months, the total ACV of USD5.1 is down ~37% from the previous 12 month period. The outlook for BPO continues to remain weak with human resources outsourcing (HRO) and procurement not performing, while finance & accounts (F&A) remains tepid. Cloud and SaaS are having a bigger impact on BPO demand.”

Reports about the geographical sector stated that America’s ACV, while highest in the group, was down by 16% to $1.9bn. In America, while the financial and retail sector was growing the manufacturing and telecom/media sector registered a decline. “In BFSI”, according to Nomura, “deals have changed from standardised solutions to more bespoke deals with highly tailored customized requirements. Discretionary spend is back and transformational work to drive growth is driving the demand.”

The ACV of EMEA, owing to UK, France and Nordic was up by 29% y-o-y at almost USD2.9bn, while APAC, driven by India, South-East Asia and Australia-New Zealand was up by 89% y-o-y.

Nomura stated that “We view these findings to be positive from a demand perspective for India IT as 1) it indicates a strong start to the year with likely 1H ACV growth of 15%+; 2) suggests some pick-up in Americas (highest ACV in last 4 quarters) and APAC (90% y-y growth), which have underperformed Tier 1 IT growth on an LTM basis and 3) continuation of strong growth trends in Europe.”


Maruti to recall over 1 lakh Swift, DZire and Ertiga

Maruti Suzuki is recalling over 1 lakh units of Swift, DZire and Ertiga for replacing a faulty fuel filler neck that may cause fuel smell and leakages

Maruti Suzuki India Ltd (MSIL), the country's largest car maker on Friday said it will replace the ‘fuel filler neck’ of 1.03 lakh units of its popular cars like Swift, DZire and Ertiga. It will replace fuel filler neck in these vehicles free of cost.

In a regulatory filing, MSIL said, 42,481 units of DZire, 47,237 units of Swift and 13,593 units of Ertiga manufactured between 12 November 2013 and 4 February 2014 would be recalled.

There is a possibility of fuel smell in the affected vehicles and in extreme condition, there may be some fuel leakage if fuel is filled up to the Fuel Cap beyond the ‘Auto cut-off level’, it added.

MSIL said dealers would contact owners of all vehicles and would replace the ‘fuel filler neck’ free of cost.

The statement added that this exercise is limited to vehicles within the above specified range and does not pertain to any other vehicle.

Maruti Suzuki closed Friday 1.5% down at Rs1,930.5 on the BSE, while the benchmark Sensex ended the day marginally down at 22,629.


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