Close: Infosys does not surprise but Markets do !

Infosys results had investors wondering whether this belwether would be able to turn sentiments. The results were in line with market expectations. The element of positive surprise was missing and that was the difference between this time and earlier. The appreciating rupee had taken out the bite out of a good set of numbers. Markets started in red and lost some ground in the early trading sessions but then got ranged. Investors then got into a buyng mode and buying was seen in Software, Engineering, Banking and Automobile stocks. Market further ventured in the positive territory as buying intensified in the final trading hours and the market ended in Green near the high point of the day. There was not much action seen in mid caps as Buying was mainly concentrated in Index heavy weights. On the Global front, Asian indices ended their day in Red while the European indices are trading are trading mixed. Bank of England surprised by raising rates affecting sentiment though all negatives were overcome in a general positive atmosphere.

Infosys Technologies reported net profits at Rs 983 crore (Rs 9.83 billion) in the third quarter, up 5.81% versus Rs 929 crore (Rs 9.29 billion) in the previous quarter. The company's revenues were up 5.91% at Rs 3655 crore (Rs 36.55 billion) versus Rs 3451 crore (Rs 34.51 billion) QoQ. It reported other income at Rs 59 crore (Rs 590 million) in the third quarter compared to Rs 66 crore (Rs 660 million) in the previous quarter. Certainly good numbers.. more importantly the guidance remains positive and the company expects to post an EPS of about Rs66 for the year which puts valuations at 32 times earnings for FY07 and about 26 times FY08. Seem fair !

Sensex closed up by 269 points at 13630.71 helped up by gains in Wipro (621.2,+5 percent), RCVL (426.9,+5 percent), HLL (218,+5 percent), Bharti Tele (637.05,+4 percent) and TCS (1277.2,+3 percent). Restricting the gains were HDFC (1522.5,0 percent) and HDFC Bk (999.35,0 percent).

FIIs continue to be sellers. They were sellers of over Rs 1000 crores yesterday and the provisional figures for today have come negative. Thats certainly not encouraging and investors will worry whether the buying will come in or not and keep a cautious stance. Mutual Funds also have been sellers of late ahead of the 3Q numbers.

The company reported net profit at Rs 295 crore (Rs 2.95 billion) in the third quarter versus 224.4 crore (Rs 2.24 billion) in the same quarter of last year. Its net interest income was up 38.4% at Rs 928 crore (Rs 9.28 billion) from Rs 670.6 crore (Rs 6.70 billion) YoY. The company's other income (non-interest revenue) increased by 26.1% to Rs 373.3 crore (Rs 3.73 billion) in the third quarter from Rs 296.1 crore (Rs 2.96 billion) in the corresponding quarter of the previous year. The net interest margin stood at 4%. For the nine months ended December 31, 2006, the bank earned total income of Rs 6021.1 crore (rs 60.21 billion) against Rs 3916.7 crore (Rs 39.16 billion)in the corresponding period of the last year. HDFC Bank posted net profit at Rs 797.9 crore for the nine months ended December 31, 2006, up 31.3% over the same period of last year. Stock ended the day up by 0.76%.

Maruti Udyog Ltd is set to launch a new diesel Swift at an aggressive price of Rs 4.5 lakh. The would be the first major foray of Maruti in the diesel car segment, Swift D will be powered by a 1.3 litre Fiat multijet engine, manufactured at the company's factory at Manesar in Haryana. The Swift D will come at a higher price than the current petrol models' the Swift LXi is available at Rs 3.99 lakh. Diesel vehicles currently account for 30 per cent of the 1.2 million sold in India, the share is expected to climb to 45 per cent of the projected 2 million market by 2010. Diesel prices are much lower than Petrol prices and thats the reason for the attractiveness. Stock ended the day higher by 3% helped more by sentiment rather than this news. Competition is only increasing.

Investor confidence in emerging markets have taken a beating which saw the sustained selling in the last two days. Thailand first put in the foreign exchange curbs last month which caused a major flutter. Thailand partially eased those rules as investors voted with their feet. Venezuela brought in a similar experience after the President pledged to Nationalise industries. Venezuelan President Hugo Chavez this week pledged to nationalize industries from energy to telecommunications. Venezuela's stock index plunged 19 percent yesterday, its largest decline on record. The head of the National Assembly Finance Committee later pacified that the telecommunications, oil and power companies subject to a nationalization plan will be compensated which helped the Index up 5.8 percent on that though the worries about the amount of compensation still remain. FIIs have been sellers across as they tend to group emerging markets together and selloff in one markets leads to profit taking in the others. India falls in the category too. Such events dont bring in comfort.

Also the worry on Japan interest rates continues. Comments by Bank of Japan chief economist Hideo Hayakawa that the consumption component of gross domestic product (GDP) was likely to have rebounded sharply in October-December after a contraction in the preceding quarter gave markets the cue that BOJ may be prepared to raise the overnight call rate by 25 basis points to 0.5 percent as early as next week, which would take the rate to its highest since 1995. BOJ has its meeting set for Jan. 17-18 meeting. Japan increasing interest rates is certainly not good for global equities.

Technically Speaking: It was a good pull back rally and momentum is in favour of the upward move for now. Volumes were pretty good at Rs.4414 cr. Advances outnumbered the Declines as there were 1740 advances against 897 declines. Sensex touched an intra day high of 13667 and low of 13303. Resistance level was at 13783-13907 and the support at 13418-13178 levels.