Markets end marginally lower; IT stocks drag4 min read . Updated: 03 May 2019, 04:38 PM IST
- IT stocks came under pressure after tech giant Cognizant slashed its full-year revenue growth outlook
- A strengthening rupee also weighed on the counters
Equity benchmarks Sensex and Nifty ended marginally lower Friday following a sudden sell-off at the fag end of the session amid weakness in IT bluechips.
After trading on a positive note through the day, the BSE Sensex ended 18.17 points, or 0.05 per cent, lower at 38,963.26. During the day, the index touched an intra-day high of 39,172.76 and a low of 38,920.17.
In similar movement, the broader NSE Nifty slipped 12.50 points, or 0.11 per cent, to close at 11,712.25.
In the Sensex pack, losers included TCS, HUL, Tata Steel, HCL Tech, Infosys, Bajaj Finance, HDFC, IndusInd Bank, Asian Paints, ITC and Vedanta, shedding up to 3.70 per cent.
Shares of HUL were down about 2% to ₹1,688 in noon trade. The FMCG major will announce its Q4 earnings later today. HUL’s earnings—usually the bellwether for India’s fast moving consumer goods (FMCG) market—helps gauge consumer demand and monitor sentiment. (Read: HUL to report Q4 earnings today: What to expect)
The index for banking stocks, Nifty Bank, was up 0.80% in noon trade. Bank of Baroda, Kotak Mahindra Bank, Axis Bank, Yes Bank and PNB were up between 1% and 2%.
Cognizant March 2019 quarter earnings "disappointing on all counts", says Kotak Institutional Equities in a report. But a "large part of the slippages seems specific to Cognizant and not representative of growth across the industry. However the risk to industry growth from the financial services vertical cannot be denied. Clients in the capital market segment of banking have turned a bit more cautious in spending outlook. In addition spending by regional banks in the US is also turning cautious. Other segments of financial services are steady in our view," the brokerage said in a note.
State-run engineering and construction firm Ircon International Ltd (Ircon) Thursday said it has bagged an order worth ₹635 crore from Sri Lanka Railways. The contract is for upgradation of the northern railway line from Maho-Omanthai in Sri Lanka, Ircon said in a statement. Under the contract, Ircon will upgrade single line broad gauge track from Maho-Omantha of around 128 km length including associated infrastructure works, it said. Ircon shares were up 2% at ₹401 in early trade.
Cognizant Technology Solutions on Thursday nearly halved its 2019 revenue expectations after missing first-quarter results, as the IT services and outsourcing company faces sluggish demand in its financial and healthcare businesses. The company forecast 2019 revenue growth in the range of 3.6% and 5.1% in constant currency, compared with between 7% and 9% earlier.
"Revenue performance reflects both external factors, including in-sourcing among a few large financial services clients and the spending pullback in healthcare clients that are in the midst of merger integration, as well as Cognizant-specific execution issues," new Chief Executive Officer Brian Humphries said on his first post-earnings call.
The company's reliance on financial services sector has been weighing on its overall revenue growth in the past few quarters. Chief Financial Officer Karen McLoughlin on the call said the company was seeing some cautiousness in the banking sector around levels of spending in the second half of the year. (Read: Cognizant projects slowest growth in its history)
Asian share markets were subdued on Friday amid thin holiday trade although the dollar found support as investors pared expectations for a U.S. rate cut this year while oil prices loitered near one-month lows on oversupply fears.
Australia's benchmark index was last up 0.2 percent, New Zealand shares were off 0.5 percent while South Korea's KOSPI slipped 0.3 percent. Trading volumes were light across Asia with markets in China and Japan still closed for holidays.
Overnight on Wall Street, major indices gave up initial gains and closed in the red, weighed down by energy shares.
World stocks have rallied hard this year - the S&P 500 has climbed more than 16 percent so far in 2019 - but further gains will be hard to come by, analysts at Capital Economics said.
Oil prices slipped today, extending a steep fall from the previous session on surging U.S. output and an expected supply increase from producer club OPEC and putting crude on track for a second week of declines. Brent crude oil futures were at $70.56 per barrel after losing almost 3% in value the previous session.
US crude oil production reached a record 12.3 million barrels per day (bpd) last week, rising by around 2 million bpd over the past year. U.S. crude exports broke through 3 million bpd for the first time this year, according to data from the Energy Information Administration.
India’s largest FMCG firm, Hindustan Unilever Ltd, is set to announce its March quarter (Q4) results today. The company, that sells products across personal care, home care, and food and beverages segments, has been reporting strong volume growth over the last few quarters.
HUL’s earnings—usually the bellwether for India’s fast moving consumer goods (FMCG) market—helps gauge consumer demand and monitor sentiment. (Read: HUL to report Q4 earnings today: What to expect)
The markets are expected to remain tepid on Friday while fall in crude oil prices may offer some support to Indian equities.
Among key results, index heavyweight Hindustan Unilever Ltd will declare its March quarter results today. Analysts at Motilal Oswal Securities Ltd expect Hindustan Unilever’s revenue to grow 9.5% year-on-year in March quarter, with underlying domestic volume growth of 8%. Base quarter volumes were high at 11%. Key issues to watch out will be comments on consumer demand environment, pace of rural growth and performance of Lever Ayush.