MACRO DATA OVERSHADOWED BY IT EARNINGS

Before the IIP and CPI came in, and after the market closed, Infosys really warmed the hearts with its performance for Q3FY22.

Posting a 7% sequential rise in consolidated net profit at Rs.5809 crore, EBIT too showed a good 7% rise at Rs.7484 crore while margins remained more or less status quo at 23.49%. Revenue was up 8% at Rs.31,869 crore. More than these numbers, the market is sure to be thrilled with its revenue guidance for FY22. It upgraded its revenue guidance to 19.5 to 20% v/s earlier estimated growth at 16.5 to 17.5% in constant currency.

And there was macro data too. First the CPI for Dec which came in at 5.59% - a 6-month high v/s 4.91% (MoM) and v/s 4.59% (YoY). In CPI, it is food inflation which was the main culprit at 4.05% v/s 1.87% (MoM).

Fuel and light inflation moderated to 10.95% v/s 14.35% (MoM) while inflation in food and beverages basked stood at 4.47%, up from 1.87%.

The RBI has been mandated by the government to keep retail inflation at 4% with a margin of 2% on either side. This means, we are now at the upper side of this margin.

On one hand, inflation accelerated and on the other, growth showed pain. IIP for Nov was at 1.4% v/s (-)1.6% (YoY) and down from 3.2% in Oct – a 9-month low. Manufacturing sector showed a meager growth of just 0.9% vs 2% (MoM). Capital goods remained in the negative at (-)3.7%. Clearly with the base effect gone, the indices are showing the supply shortage pangs and the struggling manufacturing performance is a direct pointer to this very fact.

The market will pretty much ignore this macro news tomorrow was the focus will be all on Infosys, TCS and Wipro. That will dictate the market trend, not even the Omicron! Enjoy this pre-Budget rally but remember to book profit at every stage….