Markets This Week
The week at Dalal Street has not been a cheerful one. India’s benchmark equity index, the 30 scrip BSE Sensex, fell about 3.5 percent this week to post its worst fall in over four months. Sensex closed the week at 27,437.94 points, a fall of 1004.2 points (previous weekly closing 28,442.10 points). The 50 scrip NSE benchmark index, the CNX Nifty similarly followed a downslide 8305.25 points, a drop of 300.75 points or 3.49 percent over the previous week’s closing figure of 8606 points.
Market watchers blame the fall of the indices on the ongoing tussle between the government and the foreign investors over taxes, the likelihood of poor monsoons, and the declaration of corporate earnings that have disappointed street expectations. While the plunge of the indices has retail investors worried about a reversal of the Bull Run trend, markets will continue to remain under pressure till Nifty closes above 8500 points and Sensex goes over 28000 point levels. For now, investors are hoping that the Nifty does not fall below the 8200 level in the upcoming week. Wipro, Infosys, Tech Mahindra, Tata Steel, Cipla, Yes Bank, and TCS were among the blue chips that lost the most at the Nifty. CNX Mid-cap too underperformed at both the key indices.
Gold jewellery and biscuit sales picked up slowly but steadily on the occasion of Akshaya Tritiya. Retailers across the country reported an increase in sales by about 25 percent on the day.
The rupee closed on Friday at 63.56 against the US Dollar – a three and half month low for the rupee. The previous lowest level for the domestic currency was recorded on 6 January (close at 62.32). The fall of the rupee this week, however, was not a result of influences from other Asian currencies, since the dollar weakened in strength against these others. According to news reports, much of the rupee’s weakness is due to the fact that there are more buyers than sellers of the USD. This again is caused by the differences in interest rates between developed countries and India.
Infosys Disappoints Investors
On Friday, IT major and India’s second largest software firm, Infosys, dropped about 5.95 percent following the declaration of Q4 results for FY 2014-15 that disappointed market expectations. Infosys reported net profits to the amount of INR 3,100 crore (up 3.3 percent) in the quarter ended 31 March 2015, vis-a-vis an expectation of INR 3,170 crore profit predicted by experts. The company’s revenue went up by about 4.2 percent to INR 13,410 crore against the expectation of INR 13,890 crore profit. As a result Infosys’ market capitalisation fell from INR 2,43,769 crore to INR 2,29,263.79 crore – a decline of almost INR 14,500 crore. In an effort to buoy investor sentiments, Infosys came up with major announcements after the results declaration. Chief Executive Officer Vishal Sikka said that Infosys was well on its way to reclaiming its place as next-generation technology giant and would please investors with its numbers by the year 2017. He said that senior management aspired to channelise all efforts into making Infosys a USD 20 billion company by 2020.
The IT giant also announced its acquisition of US based digital e-commerce services provider Kallidus for about USD 120 million. This is Infosys’ second important acquisition in the past three months. Kallidus Technologies uses the brand Skava to provide ecommerce solutions including mobile applications and websites, and digital catalogues and brings with it over 250 employees mostly based out of its headquarters in San Francisco. Apart from the services it provides, Kallidus shall also bring Infosys revenue from the various licenses it holds.
Infosys shares stood at 1996.25 a share at the BSE by close of Friday.
Avantha to Quit Crompton Greaves Consumer Products Business
US-based Avantha Holdings Ltd. has decided to sell its entire promoter stake of about 34.37 percent in Crompton Greaves Consumer Electricals Limited’s consumer durables business. Most of the holding has been picked up by a group of investors led by Advent International and Singapore Government’s investment company Temasek. Gautam Thapar, the lead promoter of Avantha Group, closed the deal at about INR 2000 crore. While Advent did not spell out the details of the deal, it looks likely that it shall continue using the brand names associated with the consumer products businesses of Crompton Greaves. While Advent has been aggressively investing in India since 2007, this is its biggest deal yet in the country. Crompton Greaves Consumer Electricals Limited will now demerge from Crompton Greaves and then Advent, Temasek, and other investors will follow SEBI guidelines to launch an offer.
USD 2.4 Billion State Bank of India Stake Sale Deferred
India’s biggest lender, State Bank of India has announced plans to raise about INR 150 billion (approximately USD 2.4 billion) through a share sale likely to be held in June. The sale which was initially scheduled for April has been deferred due to a fall in SBI shareprices. SBI has recruited Axis Bank, JM Financial, Barclays, Bank of America Merrill Lynch, and Kotak Mahindra Capital as stake sale advisors. The State Bank of India share price by close of 24 April, 2015, trading session was INR 275.65 a share, a decline of INR 1.6 or 0.58 percent over its previous closing.
