After a weak opening in line with their Asian peers, the lower earnings reported by IT major Infosys further hurt the performance of Indian indices. Even the improved factory output numbers in May could not lift the bearish sentiments. Indian share markets continued to slide deeper into the red in the last two trading hours. All sectoral indices are trading in red with IT, realty and consumer durables stocks being the biggest losers.
As per a leading financial daily, Index of Industrial Production (IIP), that saw a flat growth in April 2012, reported an improved 2.4% YoY rise in May 2012. However, as compared to 6.2% YoY growth registered in May last year, the growth in factory offtake continues to remain sluggish. While the manufacturing sector accelerated by 2.5% YoY in May from 0.1% YoY growth recorded in the previous month, output of both mining and capital goods sectors fell by 0.9% and 7.7%, respectively on a YoY basis during the month. Electricity production grew by 5.9% YoY in May 2012.
Most of the large IT stocks are trading in red with Infosys and Wipro leading the pack of losers. A leading business daily has reported that Mahindra Satyam is in discussions to acquire a European aerospace engineering firm. This would be part of the IT services provider's plan to improve its offerings in the engineering space. As per company officials, Mahindra Satyam is likely to finalise the transaction in a few months. However, it may be noted that responding to the business daily's query, the company's CEO stated that this news is speculative in nature. However, he did add that the company is looking to acquire, nothing is finalised yet. It is further reported that the company is looking at spending Rs 8 bn towards two transactions by the end of the year. This includes looking at BPO businesses as well. Funding the acquisition would not be a problem for the company given its Rs 30 bn cash balance which it had at the end of FY12. The stock is down by 0.8%.