If the Nifty goes below 5,190 we may see a serious downturn setting in

The subdued dollar guidance by IT giant Infosys dragged the market lower with the IT sector ending as the top sectoral loser. Yesterday we mentioned that the benchmarks will soon break out of the range. Today the Nifty hit a high of 5,262, the lowest in the past 10 days (including today), while it plunged to a nine-day low (including today) at 5,218. If the index closes strongly below 5,190, we may see a serious downturn setting in. The National Stock Exchange (NSE) saw a volume of 62.35 crore shares.

The market opened lower following lower dollar guidance for FY13 by IT major Infosys, which announced its Q1 earnings this morning. Weak global cues also weighed down on the market. The Nifty declined 66 points to open at 5,240 and the Sensex contracted 191 points to start the day at 17,297.

Infosys, India's second largest software company, reported a 32.9% jump in its first quarter net profit to Rs2,289 from Rs1,722 crore while its total revenues rose 28.5% to Rs9,616 crore. Though the company exceeded its revenue forecast in rupee terms, it failed to meet dollar revenue guidance of $1,771 million to $1,789 million for the June quarter. The IT major has slashed its dollar revenue forecast to $7.34 billion, a growth of 5% y-o-y, against the earlier guidance of $7.55 billion-$7.69 billion, a growth of 8%-10%.

The market hit its intraday high in initial trade itself on select buying in the pharma sector. At the highs, the Nifty rose to 5,262 and the Sensex went up to 17,329.

Infosys' disappointing guidance saw the IT and technology sectors emerge as the top losers. Even the uptick in the industrial output numbers, which were released around 11am, failed to cheer investors.

The Index of Industrial Production (IIP) for May stood at 2.4% as against 0.9% contraction in previous month. The government has revised its April output from 0.1% (provisional). While growth in key sectors like capital goods and mining came in negative, growth in manufacturing, electricity, basic goods and consumer goods was lower as compared to previous month.

The benchmarks dropped to their lows in noon trade on a subdued opening of the European markets as the minutes of the June meeting of the US Federal Reserve failed to highlight any new measures to boost the slowdown in the world's top economy. Back home, the Nifty fell to 5,218 and the Sensex tumbled to 17,181.

A feeble recovery from the lows helped the market close off the lows, but in the negative for the second straight day. The Nifty settled 71 points (1.34%) lower at 5,235 and the Sensex tumbled 257 points (1.47%) to finish at 17,233.

The advance-decline ratio on the NSE was negative at 539:1163.

Among the broader indices, the BSE Mid-cap index declined 0.59% and the BSE Mid-cap index dropped 0.66%.

BSE Realty (up 0.94%) and BSE Oil & Gas (up 0.27%) were the only gainers in the sectoral space. BSE IT (down 5.11%) was the top loser. It was followed by BSE TECk (down 4.43%); BSE Consumer Durables (down 1.78%); BSE Capital Goods (down 1.45%) and BSE Auto (down 1.15%).

The top gainers on the Sensex were ONGC (up 1.42%); Hero MotoCorp (up 0.88%); GAIL India (up 0.63%); Tata Power (up 0.60%) and Cipla (up 0.54%). The key losers were Infosys (down 8.15%); Wipro (down 3.98%); Bharti Airtel (down 3.04%); Mahindra & Mahindra (down 2.09%) and Tata Motors (down 1.97%).

The top two A Group gainers on the BSE were-United Spirits (up 6.14%) and Indiabulls Real Estate (up 4.13%).
The top two A Group losers on the BSE were-Infosys (down 8.15%) and Hexaware Technologies (down 4.47%).

The top two B Group gainers on the BSE were-RPG Life Sciences (up 20%) and Mahalaxmi Rubtech (up 19.87%).
The top two B Group losers on the BSE were-Nissan Copper (down19.89%) and NEPC India (down 17.55%).

The top performers on the Nifty were Jaiprakash Associates (up 2.42%); ONGC (up 1.46%); Hero MotoCorp (up 1.41%); GAIL India (up 1.30%) and BPCL (up 1.20%). The top laggards were Infosys (down 8.54%); Wipro (down 4.07%); Bharti Airtel (down 2.99%); IDFC (down 2.71%) and Punjab National Bank (down 2.58%).

Markets in Asia settled down on concerns about economic growth across the world. Within the region, the Bank of Korea cut its base rate by 25 basis points to 3%, the first cut in over three years. Bank of Japan, at the end of its two-day meeting, kept rates steady while pledging to buy more short-term securities and reducing the amount it offers under fixed rate market operations.

The Hang Seng tanked 2.03%; the Jakarta Composite declined 0.87%; the KLSE Composite fell 0.24%; the Nikkei 225 contracted 1.48%; the Straits Times dropped 0.58%; the KOSPI Composite tumbled 2.24% and the Taiwan Weighted declined 1.75%. Bucking the trend, the Shanghai Composite gained 0.46%.

At the time of writing, the key European markets were down between 0.62% and 0.78% and the US stock futures were in the negative, pointing to a negative opening of the US markets.

Back home, foreign institutional investors were net buyers of shares totalling Rs84.42 crore on Wednesday whereas domestic institutional investors were net sellers of stocks amounting to Rs356.85 crore.

Cairn India plans to raise crude oil production from its Rajasthan block by over 70% to 15 million tonnes if the government permits further exploration in the prolific block. The company believes the production can reach 300,000 bpd or 15 million tonnes per annum and has made an application to the government seeking permission to explore within the 3,111 square kilometre mining lease covering 25 oil and gas finds. The stock gained 0.55% to close at Rs313.40 on the NSE.

Essar Ports has received approval from the Paradip Port Trust to commence work on an all-weather coal berth in Orissa. Essar Ports will build a mechanised berth of 370 metre length with a handling capability of 14-8 million tonnes a year (mtpa). The stock gained 1.13% to close at Rs94 on the NSE.