The first published results of the new season released by IT giant Tata Consultancy Services disappointed market participants in Dalal Street. As several brokerages have predicted that the first quarter (Q1) of the fiscal 2019-20 is unlikely to lift market mood if TCS numbers are any indications. The immediate impact was seen in the 30-share Sensitive Index of Bombay Stock Exchange and 50-scrip Nifty of National Stock Exchange extending their losses for yet another session.
“Nifty may retreat below 11,500 in the next few days. Expect no new highs soon,” says Sharekhan’s Mr Rohit Srivastava. Analysts say under the circumstances, participants need to look at selective packets for asset allocation and we see a multiple possible triggers for oil and gas sector. The biggest reason why indices are expected to remain under pressure is that investors in last few sessions have lost heavily ~ more than Rs 8 lakh crore on account of domestic as well as external factors. Brokerages are also advising long positions to investors.
The main gauges remained volatile as in the previous sessions. Bank shares except a few private lenders mostly traded in the red. The Sensex settled at 38,557.04 (-173.78) points, down 0.45 per cent with eight gainers and 22 losers. Nifty closed at 11,498.90 (- 57.00) points, down 0.49 per cent, as 14 stocks ended in green and 36 in red. Nifty Bank lost further ground ending at 30,522.10 (-47.05) points losing 0.15 per cent. The top gainers in Sensex included Sun Pharma at Rs 390.20, up 0.96 per cent and ICICI Bank at Rs 431.85, up 0.75 per cent. Bajaj Finance was 5.05 per cent down at Rs 3,421.40 and Tata Steel fell 3.06 per cent closing at Rs 454.00.
A study by a business website suggested that about 50 of the BSE-500 shares have yielded double digit returns in April-June quarters to investors on account of their better performance/earnings in Q4 2018-19. Shares of some of these companies even surged 10 to 35 per cent in the last three months. Some of the companies that gave better returns to investors included SpiceJet, HDFC AMC, HDFC Life Insurance, SBI Life Insurance, Bajaj Financial Services and Bajaj Finance. “Overall June quarter earnings are expected to be quiet although we expect stronger recovery in the second quarter,” said Mr Sampath Reddy of Bajaj Allianz Life.
In the aftermath of below expected numbers of TCS, other IT stocks also slipped into red since market participants consider the Tata Group flagship as the IT bellwether. The stock on BSE swung between Rs 2,071.30 and Rs 2,127.8 intraday against yesterday’s closing of Rs 2,133.35 after several broking firms came out with their projections/guidance for the stock. Two domestic brokers Sharekhan and Prabhudas Lilladher continued to rate TCS as “buy” with 12-month target price of Rs 2,300 and Rs 2,291 respectively. External bank Credit Suisse rated the share “neutral” and cut the target price to Rs 2,000 from earlier 2,130. CLSA maintain “buy” but lowered the target price to Rs 2,570 from Rs 2,650. It said TCS missed out on revenue and margins but deal wins and outlook remains strong. The constant currency growth stood at 10.6 per cent year-on-year. It missed margins due to supply pressure.