Unabated profit booking activity in index heavyweights made the benchmark indices pare almost all of the opening gains during the previous two hours of trade. Currently, selling activity is being witnessed among oil & gas, banking, capital goods and FMCG sectors. However, realty, consumer durables, IT and healthcare stocks are managing to find favour.
The BSE-Sensex and NSE-Nifty are trading down, lower by around 24 points and 3 points respectively. Currently, the BSE-Midcap and BSE-Smallcap indices are trading in the green, higher by 0.4% and 0.6% respectively. The Rupee is trading at 44.37 to the Dollar.
The stock of India’s second largest IT service provider, Infosys touched its all-time high of Rs 2,823.8 on BSE today. It may be noted that Infosys reported a stronger than expected financial performance for FY10 on 13th April, 2010. Despite, muted IT demand in the global markets, Infosys’ topline and bottomline grew by 5% YoY and 4% YoY respectively during FY10.
The company has won a 3-year contract from global software giant Microsoft to manage the latter’s internal IT system across 104 countries and 450 locations globally. The deal which is estimated to be around US$ 150 m (or Rs 6.65 bn) will require Infosys to manage Microsoft’s helpdesk and customer support systems, its IT infrastructure and application support systems across its globally spread locations. Infosys will be responsible for streamlining Microsoft’s implementation operations and its support services so as to drive costs lower. The deal is believed to be an outcome-based pricing model wherein Infosys will be paid based on the success it achieves in achieving these predetermined targets. We believe that this is a significant deal for the Indian IT major which plans to generate about one-third of its revenues from newer business models in the next 5 years.
According to a leading business daily, Indian pharma major Ranbaxy is voluntarily recalling 2 batches of one of its drugs from the US market as a precautionary measure. The company will recall 2 consignments of its antibiotic Amoxicillin & Clavulanate Potassium due to some minor defect in its oral suspension. Though it is believed that this recall will not affect the company’s revenues from the US market, this will surely make its going tougher with respect to the US drug regulator, USFDA. It may be noted that the company has been facing considerable problems with the USFDA for its manufacturing practices. Due to violation of US manufacturing norms, it has already banned about 30 Ranbaxy drugs made at the latter’s Indian plants. We believe that such recalls will only bring more troubles to Ranbaxy’s plans in the US.