Infosys Powers Mumbai Rally

Elena
11 Jan, 2007
New York City

Infosys Q3 results were the catalyst of the market recovery, together with aggressive buying in other technology stocks in late afternoon trading, which helped the index to settle with a gain of more than 2%. Ten sector indices closed in positive territory. Reliance Communications led the gainers, Wipro also surged and HDFC Bank recovered from initial losses. Reliance Industries finished higher while the only two large-caps of the Sensex stocks that declined were HDFC and Grasim.

[R]10:30AM NY 9:30 PM Mumbai Indian benchmark surges on Infosys Q3 earnings.[/R]
The Sensex on BSE finished with a gain of 268.55 points, or 2.01% at 13,630.71. The market-breadth was very strong as there were almost two advancers for every decliner. As 1,759 stocks advanced, 886 declined and 57 were unchanged. Of the 30 stocks in the Sensex, only two declined, while the rest advanced. The turnover on BSE was Rs 4,414 crore, as compared to Rs 4,131 crore on Wednesday. The turnover on NSE was Rs 9,854.7 crore, higher than Rs 8,572.23 crore on Wednesday.

Trading highlights

Infosys was in the limelight today, as it reported record profit in Q3 after banks and insurers increased orders. Net income rose 52% to 9.83 billion rupees ($221 million), or 17.24 rupees a share, in the quarter ended Dec. 31, matching the forecasts. Still, the company said that the rate, at which workers quit, increased to 13.5% from 10.8% a year earlier. The appreciation of the rupee reduced operating margin by 200 basis points. Growth in Europe, growth in package implementation, growth in product revenue and growth in the clients contributed to the strong results. Infosys, which had slipped to a low of Rs 2,100 in early trade rebounded after posting Q3 results, and ended 0.30% higher at Rs 2,175 on trading of 10.47 lakh shares.

Economic news

Goldman Sachs, financial services company, announced that it will start its brokerage operations in India this year. Standard and Poor''s stated that it may downgrade British telecom company Vodafone if its proposed bid for Hutchison Essar Ltd goes beyond $19 billion.

Most-active stocks

Tech Mahindra topped the value chart with a turnover of Rs 260.80 crore followed by IFCI and Infosys.

Advancers

Reliance Communications led the advancers, up 5.91% to Rs 431.30 on 33.99 lakh shares. The company has also restated its interest to buy Hutch Essar.

Infosys strong performance buoyed other large-cap IT stocks. Wipro jumped 5.32% to Rs 622, recovering from a low of Rs 580. Satyam Computers advanced 3.17% to Rs 479.05 and TCS rallied 3.40% to Rs 1,276 after plunging to a low of Rs 1,205. It advanced to a high of Rs 1,297.90.

HDFC Bank rebounded after it fell following the announcement of its Q3 results, with the private sector banking posting 31.7% growth in net profit for Q3 December 2006 that was in line with market expectations. HDFC Bank Ltd ended 0.8% higher at Rs 1,007.

Hindustan Lever was up 4.60% to Rs 218.15 and ITC gained 3.31% to Rs 168.70. Other foreign capital goods also surged with Proctor & Gamble, up 3.27% to Rs 900, Dabur India rising 1.94% to Rs 152.40, Marico advancing 2.43% to Rs 544.85, and Glaxo Smithkline Consumer adding 3.65% to Rs 590.

State-run oil companies advanced after crude oil futures dropped below $53 in international markets on Thursday. Indian Oil Corporation gained 2.42% to Rs 457.35, HPCL was up 2.45% to Rs 291, and BPCL rose 2.55% to Rs 354.

Index heavy Reliance Industries closed 1.98% higher at Rs at 1,298.50. Reliance is waiting for the Indian oil sector regulator to decide whether to approve the plan of the company to develop an oil find in a block off the east coast.

Decliners

There were only two notable decliners on Thursday. HDFC shed 0.44% to Rs 1,520 and Grasim edged 0.07% lower to Rs 2,784.


[R]9:45AM Market opened surprisingly higher.[/R]
Despite the stock futures indications, U.S. stocks opened in the positive Thursday, reflecting continuously falling oil prices and a surprising drop in jobless claims to a six-month low. Investors also looked past news that Cisco Systems ((CSCO)) is suing Apple Inc. ((AAPL)) over the iPhone trademark. Shares of the computer maker and media player fell 1.3% in early trading. Drug stocks gained in early action as Genentech ((DNA)) reported 75% profit jump in Q4 on strong demand for its cancer-fighting drugs. The stock rose 2.9%. Although oil futures continued to decline, some energy stocks rebounded. Shares of Exxon Mobil Corp. ((XOM)) rose 1%, making them the biggest positive influence on the S&P 500 and the Dow.

Retail stocks moved largely higher, with shares of Big Lots ((BIG)) and Limited Brands ((LTD)) leading the sector up for the second straight day. Shares of Big Lots climbed 3.3%, while Limited Brands rose 2.4%. However, shares of Restoration Hardware ((RSTO)) were a drag on the sector, falling 6% after the home-furnishings retailer said that discounting will cut into Q4 earnings forecasts. In the first hour of trading, the Dow Jones industrial average rose 16.98, or 0.14%, to 12,459.14. The Standard & Poor''s 500 index was up 2.77, or 0.20%, at 1,417.62, and the Nasdaq composite index advanced 11.70, or 0.48%, to 2,471.03. Bonds fell as the drop in jobless claims pointed to a healthy economy. The yield on the benchmark 10-year Treasury note rising to 4.71% from 4.69% late Wednesday.


[R]9:30AM NY-2:30PM London The FTSE 100 dips following central bank rate hike.[/R]
Having advanced 38 points before the announcement of the central bank, the FTSE 100 lost 16.2 points at 6,144.5 in early afternoon trade.

Economic news

Interest rates reached their highest level in more than five and a half years on Thursday after the Bank of England raised the cost of borrowing to 5.25%. The bank supported its move by saying that there is a risk if the inflation rising further above the targeted 2% in the near term.

Manufacturing output in the UK advanced for the first time in three months during November, but underlying growth remained almost unchanged, a report says on Thursday.

Advancers

Miners advanced, with BHP Billiton a leading the sector higher, up 2.4%. ITV rose 1.4% after Deutsche Bank raised its rating on the commercial broadcaster from hold to buy”. Insurer Royal & Sun Alliance firmed 2 % after Citigroup increased its rating from sell to hold and raised its price target. British Airways rose 1.2% and cruise ship operator Carnival put on 2.2% as travel and leisure stocks were cheered by the continued fall in oil prices.

Decliners

Persimmon slumped 3.5%, British Land fell 2.2%, Land Securities was off 2.1% and Enterprise Inns eased 3.1%. PartyGaming lost 4.4% on reports that UBS had placed 160 million shares in the online gaming group.

Sainsbury slipped 1.6%. Strong quarterly performance attracted profit-booking after the company announced that sales gained 4.2 % and Christmas week online sales rose by more than 60%. Alliance Boots lost 1.4% after it missed forecasts for third-quarter underlying sales. HMV fell 1.2% as the music and book company posted a first-half loss of 31.8 million pounds but said that sales had improved over the Christmas period.


[R]9:00AM Market futures pointed to a lower opening on Thursday.[/R]
U.S. stock futures traded slightly lower Thursday after a surprising rate hike by the Bank of England. The U.S. dollar and Treasury bonds came under pressure after the BoE raised its key interest rate to 5.25% from 5%, citing strength in the services sector and housing market, as well as inflation running at a 2.7% rate. As a result, The British pound jumped 0.8% vs. the dollar. An economic news report also weighed on bonds, as the Labor Department said initial claims for state unemployment benefits fell 26,000 to 299,000, much lower than the expected decline to 320,000.

The technology sector was in the spotlight after Cisco Systems ((CSCO)) filed a lawsuit against Apple Computer Inc. ((AAPL)) to resolve a trademark dispute over its new iPhone device. Shares of Apple fell 1.1% in pre-open trading. Among companies releasing financial results, Genentech ((DNA)) reported 75% profit jump in Q4 on strong demand for its cancer-fighting drugs. The company reported it earned 55 cents per share, higher than 31 cents per share last year, boosted by 38% increase in revenue. For 2006, the company reported earnings of $2.1 billion, a 65% increase over 2005. The biotechnology company expects 25% to 30% growth in 2007. Life insurance and annuity company MetLife ((MET)) advanced in pre-open trading after UBS upgraded its stock to buy from neutral. S&P 500 futures shed 2.20 points to 1422.20 and Nasdaq 100 futures slid 3.00 points to 1,831.50. Dow industrials futures lost 18 points to 12,490.

[R]Initial jobless claims dropped more than expected.[/R]
Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended January 6, showing that jobless claims fell by much more than economists had been expecting. The report showed that jobless claims fell to 299,000 from the previous week''s revised figure of 325,000. Economists had expected jobless claims to fall to 320,000 from the 329,000 originally reported for the previous week. With the decrease, initial jobless claims fell below 300,000 for the first time since the week ended July 22. The less volatile 4-week moving average also decreased, falling to 314,750 from the previous week''s revised average of 316,500. The Labor Department also said that continuing claims in the week ended December 30 fell to 2.428 million from the preceding week''s revised level of 2.431 million.


[R]8:00AM Cisco Systems Inc. sued Apple over its iPhone .[/R]
Cisco Systems Inc. ((CSCO)), the world''s largest networking equipment maker, sued Apple ((AAPL)) in San Francisco federal court on Wednesday, claiming that the maker of computers and media players doesn''t have permission to name its latest device the iPhone. It is a touch-screen-controlled cell phone device that plays music, surfs the Web and delivers voicemail and e-mail. The product hasn''t received FCC approval yet.

Cisco accuses Apple of violating a trademark which it has owned since 2000, as a result of buying InfoGear, which owned the trademark previously. Since December, Cisco''s wireless division, Linksys, has been shipping a family of cordless and wireless phones under the iPhone brand. Apple defends its rights, saying that it is entitled to use the name iPhone because the products are materially different.

Cisco Systems said Apple approached the company several years ago seeking to use the name. Since then, the two Silicon Valley tech giants have been negotiating, trying to reach a licensing agreement, but the talks broke down just hours before Apple''s CEO, Steve Jobs, appeared to introduce the multimedia device at the annual Macworld Conference and Expo on Tuesday.

Before the lawsuit was announced, Apple''s shares closed up $4.43 to $97. Apple shares fell 40 cents to $96.60 in after-hours trading. Cisco''s shares closed up 21 cents to $28.68 on the Nasdaq Stock Market. In after-hours trading, Cisco shares gained 9 cents to $28.77.


[R]7:30 AM Asian markets fell Thursday, Japan led the decline on rate fears.[/R]
Asian markets declined Thursday. Tokyo''s Nikkei 225 index ended down 0.6% at 16,838.17. Tokyo Electron rose 1.2% after the company said orders for chip-making equipment rose sharply in the July-to-September period. Matsushita Electric Industrial Co. gained 0.9% after unveiling a business strategy aimed at boosting profits. Toyota Motor Corp reversed early gains to end 0.4% lower. However, Honda Motor Corp rose 0.4%.

Hong Kong''s blue chip Hang Seng Index ended 0.9% lower at 19,385.37. The China Enterprises Index, following shares of mainland-incorporated companies listed in Hong Kong, shed 1.4% to 9,511.76. The Kospi in South Korea ended 0.70% higher at 1,365.31. Samsung Electronics advanced 1%. Samsung will reportedly supply semiconductors for the new iPhone of Apple.

Elsewhere in Asia, Australia S&P/ASX 200 gained 0.8% at 5,564.90, but China Shanghai Composite shed 2.1% to 2,765.40, Malaysia KLSE Composite dipped 0.6%, Taiwan Weighted Price Index gave up 0.6% and Indonesia JSX Composite lost 0.4%.


[R]6:30 AM European shares were higher on Thursday on techs, Metro.[/R]
European markets advanced in early trade on Thursday. The U.K. FTSE 100 advanced 0.5% at 6,188.60, the German DAX Xetra 30 index gained 0.6% at 6,606.09 and the French CAC-40 index rose 0.6% at 5,532.11.

Advancers

Of updates, shares in German retailer Metro Group rose 2.1% as its 2006 sales gained 7.5% to around 60 billion euros, helped by sales growth of 1.9% in Germany and international sales growth of 12.4%. Dutch bank ABN Amro advanced 2.6% after Merrill Lynch upgraded the company to buy. Deutsche Bank upgraded U.K. broadcaster ITV to buy from hold. ITV shares rose 2.6% in London. Spanish tobacco company Altadis advanced 1.6% on a report that Imperial Tobacco Group is considering a 10 billion-euro bid for its Franco-Spanish rival.

Miners BHP Billiton and Rio Tinto climbed more than 1.9%. Technology sector was higher with Nokia advancing 1.5% and Infineon Technologies up 1.6% on strength in the technology sector and Alcoa Inc. strong start to the fourth-quarter earnings season. Vodafone Group Plc, the world''s largest cellular-phone company, rose 0.5. Lehman Brothers Holdings Inc. raised its recommendation Vodafone shares to overweight from equal weight.

Decliners

U.K. supermarket chain J. Sainsbury declined 1.6% after it said that its third-quarter comparable sales increased 4.2%, or 5% excluding fuel.

Oil and gold

Crude oil declined and was below $54 a barrel, after U.S. demand for fuel dipped to its lowest in more than two years. Crude oil for February delivery fell $1.08, or 2%, to $52.94 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude for February settlement shed $1.09, or 2%, to $52.60 a barrel in electronic trading on the ICE Futures exchange. Gold for immediate delivery lost $1.70, or 0.3%, to $609.60 an ounce.

Currencies

The euro advanced to 155.96 yen in early trade in London from 154.77 late yesterday in New York. It also was at $1.2964 against the dollar from $1.2938. The yen fell to 120.29 against the dollar, from 119.64.