"Infosys Technologies has reported its Q1 earnings well before the opening of market, and they are in line with market expectations. While the revenues are up in dollar terms, they are down in rupee terms against their own expectations, villain being the strong rupee, which appreciated 8% in the reporting quarter against US$. Naturally, investors have pressed sales in the counter along with other tech heavies viz., Tcs, Wipro and Satyam too..which have corrected more than 4% in the opening trade, bringing indices into negative territory.
Gap down opening on both indices brought both indices into corrective mode, as predicted by us, and buying at lower levels helped markets to recover quickly and for most part of the day indices have traded around previous week closing and finally closed around previous week levels, shows strength in the market. The short term correction seems to be over and with positive cues from US markets and passing of an important event, markets will look for the performance of other sectors from now on, and deeper correction or strong upsurge may not be there, thus resulting in sideways movement of indices in a range consolidation for building higher base, from where strong bull move will be in the offing from Sept'07 onwards.
Infosys Technology Earnigs and Guidance: Positive features of the Q1 earnings is revenues are up in $ terms, 26000 employees are to be added during the year, shows the opportunity to increase business and grow further. Rupee hedge at 40.58 against US$ will give opportunity to report better earnings down the line, as rupee may not be allowed to slip below 40 by RBI because it is already effecting all exporters. Any strengthening of the dollar from now on shall be to the advantage of the company, hence, one has to buy on dips in the stock price or weakness in the market, due to any unforeseen circumstances, will benefit in the long term. As long as rupee trades in a band of 40 to 41 the stock and sector shall continue to under perform and cannot give higher returns like other sectors such as., real estate, capital goods, banking and finance sectors.
Outlook for the Day: Sensex has given sell signal on long term charts (japanese candle sticks) ending the 4 week rally as predicted in opening report for 11th. However, markets shall open positive today and might attempt to challenge the highs created on 10th, where selling can be expected. Volatility shall be the order of the day and it shall provide opportunity for Nifty intra day traders. Nifty futures discount is at 2 points as against 26 points previous day indicates that the shorts are covered gives positive outlook for Nifty today.
The day's range for Nifty shall be 4320 (Support) and 4444 (Resistance); Sensex shall be 14650 (Support) and 15150 (Resistance)
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