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Power & Cap good stocks suffer
Tue, 26 Aug Closing

After trading marginally above the dotted line during the post noon trading session, the Indian equity markets seemed directionless and closed flat. While the BSE-Sensex today closed higher by 6 points, the NSE-Nifty closed lower by 2 points. Even Midcaps and Smallcaps followed the broader market trend and closed flat with marginal losses. While the BSE Mid Cap index closed lower by 0.24%, the BSE Small Cap index closed lower by 82 points. Power and Capital good stocks were the biggest losers today.

As regards global markets, Asian indices closed mixed today. The Shanghai composite index was the biggest loser. The rupee was trading at Rs 60.49 to the dollar at the time of writing.

IT stocks ended the day on a mixed note today. HCL Infosys and Moser-Baer were the top losers. Infosys has stated that it may take a while for it to regain industry leading growth figures. However, the company's COO stated in a recent meet that the company is on track to achieve a revenue growth guidance of 7-9% and profit margin guidance of 24-25% for the fiscal. It may be noted that Infosys' growth guidance is far below industry expectations. Nasscom has pegged the export revenue growth for FY15 in the region of 13-15%. And Infosys is at the mid end of this range. Over the past few years, the company has missed its guidance several times and lost market share to rivals like Tata Consultancy Services (TCS). Thus, it would be interesting to see if the company is able to regain its market leading status considering attrition is proving to be a major challenge.

If the consensus expectations for the GDP growth of the June quarter are anything to go by, one may believe that India is well on the growth path. For the June quarter, economists expect growth between 5.6-6%. It may be noted that in the March 2014 quarter, the GDP growth was about 4.6%. There are several reasons for such a sharp rise in growth expectation. For one, the industrial production is on a rise. The purchasing manager index (PMI) is also above 50 after a long time. It may be noted that a reading of above 50 indicates economy is in expansion. With green shoots already visible, it would be interesting to see if the growth expectations of the next quarter indeed materialize or not.

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