Young Investor

Markets in a minute

K. VENKATASUBRAMANIAN | Updated on July 16, 2011

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As the results season starts, there is no dearth of surprises and disappointments. The studio was abuzz with conversations that sought to dissect the numbers. Here is a slice:

Prarthana: Well, the IT heavyweight Infosys somehow does not seem to be able to please the markets with its financials, looking at the past few quarters.

Vedant: Yes! The revenue growth was tepid and there was a significant fall in profits as the company saw seasonal wage hikes dent margins. There was also a growth in low-margin application services, so it appears that discretionary IT spending by clients may not be so forthcoming. The stock seems to be in a relentlessslide.

Prathana: Adding to it's cup of woes was a ‘weak' guidance. I think the markets have finally become tired of Infy's ‘under promise over deliver' mode of working. The guidance itself tends to be weak and they mildly outperform those levels, while the markets expect a big bang every time!

Vedant: CMC too came out with its results this week and gave little to cheer for investors as increased focus on hardware business dragged margins and its stock price down.

Prarthana: Yes, but the management has indicated that meatier services component will follow in the next few quarters to prop profits.

Vedant: Meanwhile, auto major Bajaj Auto seems to be driving ahead at a reasonable pace.

Prarthana: But that seems to be a tad slower than the way the market wants it to be, what with the stock price decelerating. Apparently, a 20 per cent plus growth in the top and bottom-lines doesn't seem to be enough!

Vedant: Hmmm… the macros also seem to be losing pace over the past few months. The industrial production index – IIP – was up just 5.6 per cent in May, the slowest since August last year.

Prarthana: True. The misery is compounded by the fact that the wholesale price index, WPI, was up 9.44 per cent in June. And some say that if faulty data is corrected, the WPI figure may already be over 10 per cent by now!

Vedant: That's not all! Now every economist and analyst will come out and say there will be another round of big rate hikes by the RBI. A slowing economy on the one hand and stubborn inflation on the other means that the Central bank needs to do a precarious balancing act.

Prarthana: After a lull, the cowardly terrorists have struck again in the ‘maximum' city of Mumbai.

Vedant: And quite perversely, we look at market reactions even in this distressing hour! Of course, it is to the credit of the city that it takes business seriously and never comes to a standstill, but do they have a choice?

Prarthana: We do need to move on though. The coming week will see more Sensex and Nifty majors come out with their financials.

Vedant: Let's hope at least that gives us some reason to cheer!

Published on July 16, 2011

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