Asian share markets are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 0.3% while the Hang Seng is down 1.6%. The Shanghai Composite is trading down by 1.5%. Over the weekend, US stocks closed mixed.
Back home, India share markets opened the day on a negative note. The BSE Sensex is trading lower by 113 points while the NSE Nifty is trading lower by 26 points. The BSE Mid Cap index and BSE Small Cap index both opened the day down by 0.1% & 0.3% respectively.
Sectoral indices have opened the day on a mixed note with FMCG stocks and consumer durables stocks witnessing buying interest. While, IT stocks & energy stocks have opened the day in red. The rupee is trading at 65.22 to the US$.
In the news from the IT sector. Infosys share price opened the down by 4.5% after the management guided for 100 bps reduction in EBIT (earnings before interest & tax) margin guidance for FY19.
Although the results came in-line, and the management gave out an in-line FY19 revenue growth guidance of 6-8% in constant currency terms, the street showed disappointment in the 22-24% margin guidance. This was reflected in its ADR opening 5% lower on Friday from its previous close of US$18.
After opening at US$17.1, the ADR touched lows of US$16.5 before closing at US$16.6.
The management has attributed the drop in margin guidance to required investment in the digital business, localisation within markets, especially developed ones (scaling up of local talent and data centres), investing in reskilling its employees and for revitalizing its sales team.
Moreover, the company has identified an amount of up to Rs 104 billion to be paid out to shareholders in FY19 (apart from regular dividend), which would provide support to the stock price.Further, the reaction that resulted in ADR decline was slightly overdone as these steps would mean that the revenue generation would be enhanced at the cost of margins.
