Indian share markets remain in green

Fri, 26 Jul 11:30 am

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Indian share markets have remained in green during the previous two hours of trade. The most noticeable upward movements have been witnessed in IT and capital goods shares; whereas banks and metals are facing the maximum selling pressures.

The BSE-Sensex is up by 20 points and NSE-Nifty is up by 5 points. BSE Mid Cap is down by 0.3% and BSE Small Cap is up by 0.01%. The rupee is trading at 58.97 to the US dollar.

Except Maruti Suzuki, Tata Motors and Mah. Scooters, all Automobiles shares are trading in green with Escorts and Eicher Motor leading the gains. According to a leading financial news medium, Tata Motors, the fourth largest car maker in India, is contemplating a price hike across its passenger vehicle range. The price hike may be brought into effect before the onset of the festive season. Mahindra and Mahindra and General Motors have already increased prices for their product range. The price hike comes in the light of depreciating Indian currency. While the local content in Tata Motors' cars is high, certain parts used in its vehicles are imported by its vendors.

According to data provided by SIAM, the sales of Tata Motors plunged 30% during the first quarter of this year at 52,682 units. This fall was sharper than the industry that reported a decline of 7% during the same period. It's only recently that the company announced revamp and overhaul across its product portfolio. The refurbished portfolio is expected to help the company arrest the decline in sales volumes. Tata Motors also intends to improve distribution network and customer engagement levels. However, headwinds in the form of intense competition, fuel price increases and increasing costs will continue to linger and may impact the sales performance of the company going ahead.

Except few such as CMC Ltd, Tata Consultancy Services (TCS) and Wipro, most of the Software (large) shares are trading in green with Info Edge and Tech Mahindra leading the gains. According to a leading financial news daily, Azim Premji, Chairman of Wipro, one of the largest information technology (IT) companies, has shared concerns for Indian markets, but has reinforced positive outlook for the US markets. He emphasized the weak nature of Indian markets and mentioned that the demand for IT services and goods has slowed. Also, the Chairman is working towards getting a woman director on the board of Wipro.

Wipro delivered a muted performance both in terms of revenue and net profit growth last year. The company is expected to continue its lower trajectory compared to peers going ahead. The revenue growth is expected to remain subdued on account of weakness in Indian business. The revenue guidance for 1QFY14 was in a broad range of -0.6%-1.6%. So, it could be inferred that the Management is perhaps not sanguine about the growth prospects of the IT services business in the near term. Going forward, the demand outlook, large deal wins and the client budget will be the key determinants for the performance of the company. That said, these are just short term blips and the long-term picture looks promising for the company.