Infosys Gains on Announcement of New Service Offerings

Infosys shares gained nearly 2 per cent on Friday after India's second biggest outsourcer announced three new service offerings. Infosys shares also gained from weakening of the rupee which fell to 65.90/dollar. India's frontline outsourcers earn a major portion of their revenues from the US market so a stronger dollar boosts their rupee profits.

Infosys on Thursday announced new services - Aikido - that will focus on design thinking, platforms and knowledge-based IT as part of its efforts to return to industry-leading growth numbers.

These services are aimed at helping clients address three key aspects of their business: a non-disruptive renewal and simplification of their existing landscapes, introduction of new offerings and business models in a dynamic business environment and creation of a culture of innovation in their organisations.

Announcing new services at the Infosys, CEO and MD Vishal Sikka said, "Three steps forward Ki, Do and Ai; each of these by themselves help enterprises along a great new path, each of these helps bring together and tie together a lot of Infosys services we offer to clients today and together the three of these become even more powerful than the three individually by themselves."

Infosys is aiming to achieve revenues of $20 billion by 2020, targeting $2 billion from new service offerings.

Avinnash Gorakssakar, CIO & Head of Research at Precision Investment Services, said such new service offering and other new initiatives will help the outsourcer in the long run. He added that investors with a 12-month perspective can buy the stock at current levels.

On Thursday, Infosys shares fell over 3 per cent. Mr Gorakssakar attributed Thursday's fall to rumours about a possible big acquisition by Infosys.

Google and Amazon in race to buy Tata's data centre

Google Inc and Amazon are in talks with the Tata Group to buy the data centre business of Tata Communications, says report.

Report says that the deal is expected to fetch about Rs 4,261.4 crore to Rs 4,589.2 crore ($650-700 million).

If the deal is successful, it will help Tata Communications reduce debt burden and concentrate on its core data carrier business. 

Banking Version 2.0: RBI gives in-principle approval for 11 Payment Banks

The payments banks are expected to be scaled-down versions of bigger banks and provide simple facilities aimed at covering the vast majority of the population, which is unbanked currently. They can take deposits upto Rs. 1 lac, provide remittances and disburse payments to intended recipients.

RBI has finally opened doors for establishment of Payment Banks in India. Yesterday, RBI gave in-principle approval to 11 applicants. Some of the biggest names in India got the license in current tranche. These include Reliance Industries, India Post, Bharti Airtel, Vodafone, Paytm, Sun Pharma founder Dilip Shanghvi, Aditya Birla Nuvo, Fino PayTech, Tech Mahindra, National Securities Depository and Cholamandalam Finance.
 
The payments banks are expected to be scaled-down versions of bigger banks and provide simple facilities aimed at covering the vast majority of the population, which is unbanked currently. They can take deposits upto Rs. 1 lac, provide remittances and disburse payments to intended recipients. They are not allowed to give loans though. They can still distribute third-party financial products but can't issue credit cards. Also, these banks are required to invest a major chunk of their deposits in government securities and keep the balance with regular banks.
 
The successful applicants were chosen from a total of 42 original applications. Most of the winning applicants have tied up with a range of partners. In giving out the licenses, RBI has made sure that parameters like historical records of promoters, 'fit and proper' criteria for promoters, financial soundness, five-year track record in dealings, ability to reach customers with technology and financial strength to roll out services in areas that remain uncovered, are taken into account.
 
The 31 applicants which did not get the license include names like Muthoot Finance, Future Retail's Kishore Biyani and Videocon. But RBI has made it clear that very soon, it will move to a process of 'on-tap' licensing. This means that applicants can seek licenses whenever they want to.
 
The threat to existing banks is imminent. But to say that it will be easy for payment banks to gain market share will be wrong. Existing banks have been in the business for long and are already taking steps to tackle the on-coming attack of payment banks. Many have already launched their own wallets and basic banking apps. But it is a given thing that payment banks can reach where existing banks can’t. And this will definitely result in existing banks losing some of their business.

The issue of payment bank licensing is in line with RBI’s new mandate to end the concept of unified banking licenses. And this intent is borne out of the fact that the existing approach resulted in more than half the nation remaining unbanked even after more than 68 years of independence. So if payments bank can succeed, it will auger well for India’s overall growth as savings from smaller households can be channelized into more productive purposes.

Current valuations in Indian market are little more than they should be: Russell Napier, ERIC

According to him, the way RBI has handled currency pressure is incredible and has kept India out of any trouble so far. The world is looking at Indian market closely at the moment. At the same time, India needs more capital to make things a little more comfortable and hassle-free.

ERIC Co-Founder, Russell Napier, was in talk with ET Now and discussed market condition in India.

India's Stance In EM Space

A lot has been happening in the financial industry across the world, but Napier thinks that India's position is much better than all other Asian countries. According to him, the way RBI has handled currency pressure is incredible and has kept India out of any trouble so far. The world is looking at Indian market closely at the moment. At the same time, India needs more capital to make things a little more comfortable and hassle-free.

It's not that Indian market is perfectly shaped at the moment, but it's better than all other emerging countries. Napier thinks that equity valuation in the Indian market is a bit excessive. It's more or less repeat what happened in 1982, 1998 and 2008. No emerging market is capable of avoiding this trend at this moment.

With rising uncertainty in the Asian market, Napier thinks that investors should back the dollar. It's more stable than any other currency in the world as of now. So, people who are looking forward to parking their money should give the dollar the top priority. Apart from the dollar, one other currency that has done better than most others is Japan's Yen. It can be a good bet as well.

Whatever has happened in China over the last few weeks, has forced investors to change their stand on emerging market currencies. Earlier, investors were backing Yuan and Rupee, but now they are moving away from them. For them, Yen can be a value for money. If taken into consideration the present market condition, it looks like Yen will have a more stable future than other emerging market currencies.

Towards the end of the interview, he said that Japanese equities can be a good option for long-term investment for those who don't want to take excessive risk.

Its a Crash! Dow Jones falls 358 points, Chinese fear spills over

The instability in the Chinese market seemed to spill over the U.S. stock as well, as it crashed to its worst performance in the last 18 months on Thursday.

The Dow Jones industrial average plunged 358.04 points, or 2.1 percent. The S&P 500 dropped 43.88 points, or 2.1 percent while  Nasdaq composite lost 141.56 points, or 2.8 percent.

According to media reports, this is the biggest percentage loss for Dow Jones and S&P 500 since February 2014.

The volatility in the Chinese markets has had a ripple effect world over. The Shanghai Composite Index, which crashed 3% earlier this week due to heavy selling-off in the energy and property verticals, have the investors wondering if the world's second largest economy will stabilise in the coming month. Chinese manufacturing plunged to the lowest since 2009, which only contributed to the existing panic in the markets.

F&O Data Indicates Big Crack in Nifty; ITC, Lupin in Focus

The Sensex and Nifty ended lower on Thursday tracking the fall in rupee. The Sensex fell 324 points to close at 27,608, while the 50-shares Nifty ended below the crucial psychological level of 8,400.

Change in options open interests (outstanding positions) on Thursday indicates further weakness in markets on Friday. Nifty puts of 8,400 strike witnessed maximum reduction of open interest (OI) followed by 8,500 and 8,300 strike puts. Reduction in OI of the above puts indicates that big traders- option sellers - believe that Nifty is unlikely to hold 8,300-8,400 level by expiry.

Likewise, 8,500 strike call options added maximum OI of 17 lakh share, which indicates that big traders expect Nifty not to cross 8,500 by expiry.

Total open interest in Nifty puts fell by 24.8 lakh shares, while open interest in calls increased by 60.1 lakh share, pushing the put call ratio (PCR) lower to 0.92 from 1.04 on Wednesday. Although the magnitude of fall in PCR is small, but this indicates that bulls are changing their stance and market is unlikely to get short-covering support in case of big fall.

Meanwhile, the India VIX (volatility index) closed 1.77 per cent higher at 16.975, indicating increase in anticipated volatility in the near future.

Among the Nifty-stocks ITC, Lupin and Dr. Reddy's Lab witnessed increase in bullish bets as these stocks gained on Thursday along with open interest increase. Meanwhile, Yes Bank, Cairn India and Punjab National Bank will be in focus on Friday as these stocks saw increase in bearish bets- OI of these stocks increased along with steep cut in their prices.

Among non-Nifty stocks TVS Motor and M&M Financial Services saw increase in bullish bets and JSPL witnessed addition in bearish bets. OI in Amtek Auto, which fell around 50 per cent in last two trading sessions, came down by 9.72 lakh shares on Thursday.        

Wall Street Tumbles on Global Slowdown Concern; Disney Slumps

The S&P 500 tumbled to a more than six-month low on Thursday, closing in negative territory for the year, on concern a decelerating Chinese economy will translate into slower global growth.

Consumer stocks led the decline on Wall Street with Disney down 6 per cent after a brokerage downgrade, while Apple fell 2 per cent after a report that overall smartphone sales in China fell in the second quarter.

Concern about the Chinese economy was underscored by a near 8 per cent slide in the Shanghai stock index so far this week and after the Commerce Ministry said Wednesday exports could continue falling in coming months.

"The largest issue is certainly the fact that we don't know how much the Chinese economy is slowing," said Art Hogan, chief market strategist at Wunderlich Securities in New York.

"That's manifesting itself in lower oil prices," he said, pointing to the correlation between stocks and crude futures.

U.S. crude edged higher after earlier hitting its lowest since March 2009, while Brent dropped 2.3 per cent to its lowest since January.

The 14-day correlation between the S&P 500 and Brent prices is at a five-month high.

The Dow Jones industrial average fell 358.04 points, or 2.06 per cent, to 16,990.69, the S&P 500 lost 43.88 points, or 2.11 per cent, to 2,035.73 and the Nasdaq Composite dropped 141.56 points, or 2.82 per cent, to 4,877.49.

The drops in the S&P 500 and Dow were the largest daily percentage declines since Feb. 3, 2014, while the Nasdaq fell the most since April 10, 2014.

The S&P 500 is now down 1.1 per cent year-to-date. It also traded below its 200-day moving average for the full session, for the first time since last October.

At its session low on Thursday, the S&P 500 was down 4.6 per cent from its record intraday high set in late May.

"We've had a lot of things go wrong today both fundamentally and technically. Fundamentally, there's continued concern about global growth slowing and weakness in the price of oil. The market was unable to hold the 200-day moving average from a technical standpoint," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama

"For tomorrow, ideally we could see some stabilization and a move back toward the 200-day moving average. The risk is if there's something that investors don't like, it will be really easy to sell going into the weekend."

The CBOE Volatility index rose 25.5 per cent to close at 19.14, the highest in six weeks, as traders paid more for protection against a further slide in the S&P 500.

Disney slumped 6 per cent to $100.02 and Time Warner fell 5 per cent to $73.90, leading a rout in media stocks after a Bernstein downgrade that cited a massive structural upheaval in the industry.

"The pattern didn't change overnight, but it got called by Disney for the first time on their earnings," said Hogan.

Disney shares have fallen 17.8 per cent since the company reported earnings earlier this month.

Apple fell 2.1 per cent to $112.65 after a Gartner report said China smartphone sales fell in the second quarter for the first time ever on a quarterly basis. Apple counts China as a key growth market.

One bright spot in tech stocks was NetApp, up 3.4 per cent to $30.78 after the data storage equipment maker's results beat expectations.

NYSE declining issues outnumbered advancers 2,612 to 457, a 5.72-to-1 ratio; on the Nasdaq, 2,396 issues fell and 437 advanced, for a 5.48-to-1 ratio favouring decliners.

The S&P 500 had four new 52-week highs and 40 new lows; the Nasdaq Composite had 16 new highs and 208 new lows.

About 8 billion shares changed hands on U.S. exchanges, above the 6.7 billion daily average so far this month, according to BATS Global Markets data.

Rupee Falls to Nearly Two Year-Low of 65.81/Dollar

The Indian rupee fell to 65.81 on Friday amid fears of a currency war after China's depreciation of its yuan. This is lowest value of the rupee since September 6, 2013, when it had hit 66.29/dollar.

This takes the rupee's fall close to 3 per cent when China depreciated its currency on August 11, sparking fears of competitive devaluation by different countries amid concerns about global growth.

The rupee had closed at 65.54 on Thursday.

Reserve Bank of India Governor on Thursday Raghuram Rajan had warned of risks from yuan devaluation. Dr Rajan said China's devaluation of the yuan was not a concern, but warned of the dangers of "tit-for-tat" actions by other countries if the move was part of a long-term competitive devaluation.

"I think if the Chinese depreciation holds to about this level, it's not something that one should be overly concerned about," Rajan said at a banking event in Mumbai. "If it's part of a process of getting competitive advantage through ... longer term depreciation it has to be worrisome across the world, partly because you could have tit-for-tat actions," he added.

Michael Every, Head of Financial Markets Research for Asia-Pacific at Rabobank, said that Indian economy's relative outperformance may help it better weather the global currency storm. But the rupee could remain under pressure amid global worries, he added. (With Agency Inputs)

Oil Pulled Lower by Global Stocks; on Track for Eighth Weekly Decline

Singapore: Oil prices resumed their downward trend in early Asian trade on Friday with the U.S. benchmark on track for its eighth weekly decline, pulled lower by weaker global stock markets and concerns over an economic slowdown in China.

U.S. crude for October delivery was 23 cents lower at $41.09 at 0058 GMT. The September contract, which expired on Thursday, ended 34 cents higher.

The U.S. benchmark hit 6-1/2 year lows near $40 a barrel on Wednesday and Brent crude for October delivery was down 29 cents at $46.33, after settling 54 cents lower in the previous session.

Asian stocks fell on Friday morning, following Wall Street down as fears took hold of a China-led deceleration in global growth. Chinese manufacturing data due later Friday will offer the latest glimpse into the health of the world's second largest economy.

The dollar continued retreating on shrinking expectations of an U.S. interest rate hike in September, providing some support for oil prices.

Despite the rout in oil prices, some mutual funds keep ploughing money into oil exploration and production companies in the United States in a bet that production will retreat sharply over the next 12 months, setting the stage for a rebound towards $65-70 per barrel.

Gold Hits Five-Week High on Lower US September Rate Hike Chance

New York/London: Gold hit its highest in five weeks on Thursday as the dollar eased after minutes from the US Federal Reserve meeting suggested policymakers were in no hurry to raise interest rates.

Although agreeing that the economy was nearing a point where rates should move higher, Fed officials last month were worried that lagging inflation and a weak global economy posed risks too big to commit to a rate "lift-off".

"There is some frustration because the Fed meetings were not exactly conclusive for a rate hike in September," ING Bank senior strategist Hamza Khan said.

Spot gold rose as much as 1.8 per cent to $1,154 an ounce, its highest since July 15, and was up 1.7 per cent at $1,152.96 at 2:40 p.m.

U.S. gold for December delivery settled up 2.2 percent at $1,153.20 an ounce.

Spot gold has recovered more than 7 per cent from a 5-1/2-year low of $1,077 hit in a late July rout, when investors cut their exposure on fears of further price declines.

"What's supporting gold is that from unrelentingly bad news, which we saw until late July-early August. The news flow has been more bullish to gold after the Chinese central bank currency devaluation," Macquarie analyst Matthew Turner said.

"But you'd have to think that because of the rate hike the dollar would rise from here, so it's hard to get too excited."

The dollar was down 0.4 per cent against a basket of leading currencies, as bets dwindled on the Federal Reserve next month raising U.S. interest rates for the first time in nearly a decade, following the release of minutes from the July 28-29 Fed meeting.

"The focus was clearly on the perceived change of tone in the Fed," said Bill O'Neill, co-founder of commodities investment firm LOGIC Advisors in New Jersey. "The market took those minutes and the majority conclusion is that the Fed won't (raise rates) in September."

O'Neill said technical buying also buoyed prices, setting up the market to test $1,160.

US data showed home resale rose to a near 8-1/2-year high in July while factory activity in the mid-Atlantic region picked up.

Rising prices curbed physical gold demand in India and Chinese buyers, remained scarce, cutting premiums on bullion sold in the world's top two consumers.

Gold's upside bolstered other precious metals, with spot platinum also hitting a five-week high of $1,033. Palladium gained 1.7 per cent to $620.75 per ounce and silver rose 1.4 per cent to $15.50.

Sensex to Witness Gap Down Opening on Weak Global Cues

8:50 a.m.: Below are the stocks which will be in focus today:

Infosys: Infosys, India's second largest software services firm, on Thursday announced new services - Aikido - that will focus on design thinking, platforms and knowledge-based IT as part of its efforts to return to industry-leading growth numbers.

These services are aimed at helping clients address three key aspects of their business: a non-disruptive renewal and simplification of their existing landscapes, introduction of new offerings and business models in a dynamic business environment and creation of a culture of innovation in their organisations.

Analysts say that the new services will help accelerate strategy execution and formal announcement of launch of new services is a step forward.

Amtek Auto: Amtek Auto has fallen 57.6 per cent in the last one week. The management says that there is temporary cash flow mismatch and promoters have already infused Rs 75 crore. Meanwhile, the management has reiterated that the long term fundamentals are strong.

Maruti Suzuki: Dealers say that the Maruti Suzuki has hiked prices of its vehicles by Rs 3,000-9,000. Increase became effective August 11 and this price hike comes after a gap of nearly 2 years.

Delta Corp: Delta Corp will be in focus today on the back of various bulk deals. Rekha Jhunjhunwala bought 35 lakh shares at Rs 70.56/share, East Bridge Capital fund bought 60 Lakh shares at Rs 69.35/share and Morgan Stanley Asia PTE purchased 30 Lakh shares at Rs 69.35 per share.

HCL Infosystems : HCL Infosystems reported loss of Rs 41.4 crore compared to loss of Rs 47.2 crore during the previous quarter. Income from operations jumped 22.5 per cent to Rs 1,685 crore sequentially.

8:30 a.m.: Foreign institutional investors on Thursday sold Indian shares worth Rs 1,007.2 crore while the domestic institutional investors purchased shares worth Rs 567 crore.

In the F&O segment, FIIs sold index futures worth Rs 1,771 crore.

8:10 a.m.: The Sensex and Nifty are likely to showcase a gap down opening in trades today tracking weak global cues. The Nifty futures contract on the Singapore Stock Exchange was also indicating a negative start for the Indian equity markets. The Nifty futures traded on the Singapore Stock Exchange also known as the SGX Nifty was down 1.17 per cent or 98 points at 8,280.

Meanwhile, other Asian markets were trading with deep cuts. Japan's Nikkei fell 2.1 per cent, Hong Kong's Hang Seng slumped 2.15 per cent, China's Shanghai Composite and Shanghai Shenzen indices were down over 1.5 per cent each. The massive sell off in the equity markets came on concerns of weakening Chinese economy.

Overnight, The S&P 500 tumbled to a more than six-month low on Thursday, closing in negative territory for the year, on concern a decelerating Chinese economy will translate into slower global growth.

Concern about the Chinese economy was underscored by a near 8 per cent slide in the Shanghai stock index so far this week and after the Commerce Ministry said Wednesday exports could continue falling in coming months.

The Dow Jones industrial average fell 358.04 points, or 2.06 per cent, to 16,990.69, the S&P 500 lost 43.88 points, or 2.11 per cent, to 2,035.73 and the Nasdaq Composite dropped 141.56 points, or 2.82 per cent, to 4,877.49.