Plastene India Limited Issue withdrawn

May seems to be a difficult month for MotilalOswal. In May 2011 Galaxy Surfactants was withdrawn and in May 2012, Plastene India has been withdrawn. The company was tapping the capital markets with its issue for 92.55 lac shares in a price band of Rs 81-84. The issue was open for 5 working days from 9th May till 15th May. The company received a total subscription of 26.45 lac shares or 29% of the issue size. The breakup of the subscription shows that there was not even a single bid from QIB’s while Retail bidders chipped in with 5% of their quota. The encouraging response was from HNI’s who subscribed to 24.29 lac shares or 1.76 times their quota.

What went wrong? Is it just the May factor or a mere coincidence?

The problem is the same in both issues; OVERPRICING. Plastene India limited which had a price band of Rs 81-84 demanded a PE multiple of 23.62 times at the lower end of the price band and 24.50 times at the upper end of the price band. The net margins of the company were a mere 2.69% and have fallen significantly compared to last year. The net profit in March 2011 was Rs 21.23 crs which in ten months ended January 2012 has fallen to Rs 10.12 crs. The greed of promoters and merchant bankers in over pricing issues is simply killing the primary markets. The right price is something which these people need to learn. If competition with almost double the margin is available cheaper, why would one want to invest in such a new company?

Intermediaries must realise that times have changed. Gone are the days when grey market premiums and only hype were enough to sell issues. The first day listing norms change has reduced volatility and traded volumes which used to be between 10-20 times of IPO size and are now between 15-20% of IPO size, a drop to 1/50th of the volume. It is now time that pricing should be more clearly understood and debated and there be enough left on the table for investors.

To add insult to injury, one hears of the fact that while road shows to market the company were held in Ahmedabad and Rajkot, the same was not done in Mumbai. Indeed surprising as almost all broking houses have their research departments in Mumbai and good or bad, reports if any would typically come from Mumbai. Therefore any company coming out with an IPO not wanting to do a road show in Mumbai is inexplicable.

There are now two back to back disasters for the merchant banker and also almost for the market as well. The recent issue from SamvardhanaMotherson Finance Limited was yet another case in point where the price caused the downfall of the issue and was subsequently withdrawn. Actually calendar year 2012 began on a wrong note with Goodwill Hospital being the first issue of the year to open, and it was withdrawn. The track record for the current year shows that 3 issues have been withdrawn so far and the total number of issues that have been subscribed is just 5. The record so far is simply pathetic.

In the issue analysis on the company done yesterday it was erroneously mentioned that the issue closes on Monday the 14th of May. The error is sincerely regretted.

The status of applications received as at the end of Monday 14th May is given below.

The change over the second last day is 2% and the company needs to garner all its resources to get the issue subscribed. QIB’s look unlikely to subscribe so it would become imperative that HNI’s get the required subscription to get the issue through. There would be complete clarity by the time the bidding closes at 5 pm today.

Budget 2012-13 introduced the General Anti Avoidance Rule (GAAR). The finance minister managed to resolve the issue to a large extent, but Mauritius would no longer be a tax haven for doing business in India.

In his reply to the discussion on the Finance Bill, Pranab Mukherjee extended implementation of the GAAR to the next financial year. He also clarified it would not be applicable retrospectively, adding the onus of proving tax avoidance would be on the income tax department and not on the assessee. The clarification has helped sooth ruffled feathers, but it looks like the Mauritian route is no longer likely to find favour with foreign institutional investors (FIIs). Hence, it would be appropriate to say, “Mauritius, rest in peace”.

Is GAAR unique to India? No. A large number of countries have it. Australia has it since 1981, Canada 1988 and South Africa 2006, while China introduced it in 2008. Though the US and the UK do not have specific laws on GAAR, they have enough restrictions and safeguards to ensure payment of taxes.

India is a growing economy and cannot survive by being a tax haven. It needs to tax transactions, widen the tax base and ensure stricter compliance if it has to continue to grow at seven per cent or more.

The opposition to GAAR and its implementation basically stemmed from a couple of facts. With these being addressed, this issue will cool off in the 10 to 11 months between now and implementation. The primary concern was the retrospective nature of the Act, which could have gone to extremes. The I-T department could challenge companies which received tax breaks in certain investment-encouraging states like Himachal Pradesh, Uttarakhand and those in the North East. Second, with one eye on portfolio investments and the other on the fiscal deficit, we heard conflicting views that participatory notes would not be taxed while brokers issuing these would be. This confusion caused FIIs to liquidate positions and shift from Mauritius to Singapore. With the clarifications, it is now clear that Mauritius is no longer a good choice. The extension till April 2013 gives ample time for funds to relocate, without much impact on cost.

The effect of this legislation on GAAR will have far-reaching implications. The importance of India in the future because of our population, growth and consumption story will remain attractive and encourage foreign direct investment. If India’s tax laws become clearer, investors with longer horizons would come to the country, rather than portfolio investors who generally are around for the short term. The global currency volatility and rupee weakness make earning returns much more difficult. And, with some tax to be paid, would make those institutions having at least a medium-term horizon invest in India. This would also help reduce stock market volatility.

I believe giving a year’s time to digest the rules and assuring no retrospective amendment(s) and putting the onus of proving avoidance on the department will make GAAR meaningful. It will ensure better tax compliance and less litigation. The icing on the cake would be stable markets, as short-term foreign players would look for greener pastures elsewhere.

business standard article published today 110512

The very nature of its business makes investors like the loan against gold business. The risk factors seem fairly low compared to the opportunities and growth prospects. Listed companies in this space received investments from even private equity investors. Things could hardly have been better for these companies. However, over the last few quarters everything seems to be going wrong for these companies, and all the so-called positives seem to be getting neutralised, if not turning negative.

Let us look at some of these changes. Lending by banks to gold loan companies (GLCs) were treated as priority sector lending and therefore, these companies were enjoying loans at concessional rates. These low rates helped them earn huge net interest margins (NIMs).

Public sector banks have also been lending against gold jewellery. Actually, they have also lent against gold, coins and so on. The reason people go to GLCs is the next-to-nil time they take in disbursing loans. There is an allegation against these companies that, in their zest to disburse loans quickly, often they do not undertake proper due diligence and hand out loans against stolen jewellery, too. Typically, GLCs lend up to 80 per cent of the value of gold, making customers a happy lot. However, last month, the Reserve Bank of India (RBI) reduced the loan-to-value for GLCs to 60 per cent of the gold content.

Many of these GLCs have multiple names under which they do business. These companies accept cash deposits through group companies with presence in the shops/outlets from where the loans are handed out. This led to two issues. The first was the case of mistaken identity of the company for the customer, who thinks he is giving a deposit to the gold loan company. The second: that these NBFCs, classified as non-deposit taking entities, were in fact taking the deposits. RBI, then prohibited these companies from accepting deposits at these outlets.

GLCs would charge interest rates upwards of 20 per cent, even up to 30 per cent, while in the case of public sector banks, it would be less than half, or 12-13 per cent. The banks are happy with these loans as these are of short duration, have more than adequate security and in today’s times, are more or less risk-free.

The know-your-client (KYC) norms need to be followed by GLCs and banks alike. While in the case of a bank, the possibility of a walk-in customer not getting a loan is high. Typically, to get a loan you would have to go to a bank with which you have an existing relationship. Not so with a GLC. You could walk into any branch of a GLC, and get a loan. The system is quite lax and loans are easy to get.

GLCs’ television ads show bundles of notes being exchanged across the counter in lieu of gold jewellery, while in banks there are restrictions on cash withdrawals from one’s own account. It is expected that changes to this situation would be introduced shortly.

The microfinance business has taken a beating. The hype created around the initial public offering, and thereafter, of SKS Microfinance, is still fresh in the minds of investors. Gold prices have touched lifetime highs in India, thanks to a depreciating rupee. However, RBI is concerned about the future of GLCs if gold prices were to soften in India. Gold prices are softer abroad by about 12 per cent.

Finally, the periodic tapping of the bond market by GLCs to raise resources is also worrying, and does not help the cause of GLCs.

business standard article published today 040512

Promoter holding in India is about 40 per cent, while retail investors hold about 25 per cent. Another way of looking at this data is that of the 60 per cent float in the market, upward of 40 per cent of which is held by the retail investor. The savings rate in India has been falling but is still between 22 and 25 per cent. Keeping this in mind, the Securities and Exchange Board of India (Sebi) has reserved 50 per cent of all initial public offers (IPOs) for retail and non-institutional investors. Of this, 35 per cent is reserved for retail investors who may invest up to Rs 2 lakh and 15 per cent for high net worth individuals (HNIs) who can invest above Rs 2 lakh.

The media, especially electronic, has made the serious business of investing look mediocre. There are programmes that give intraday calls for making money using the game of cricket as a comparison. For investors, the net result of following these programmes is, at best, neutral, if they are lucky, but mostly negative. Having lost money on a couple of occasions, the investor starts to believe the market place is full of cheaters and decides to stop investing. In addition, the regular guests are on the payroll of TV channels and make recommendations left, right and centre, with a standard disclaimer about their investment in the stock. Instead, the record of the expert should be made public and displayed by the channel, thereby giving investors an opportunity to invest on performance. When the track record of merchant bankers has become mandatory for IPOs, why not here as well?

The recent changes made by Sebi in the listing norms for IPOs have made life easier for investors. But the going has become difficult for those who manipulated prices through unimaginable volumes and volatility on Day One of listing, only to successfully dump the stock later. The new norms are excellent and have helped matters, so far. One would expect that Sebi announce a follow-up to the order issued in December 2011 about manipulations in IPOs, as it was an interim order.

A key area of concern is investors being lured to trade in derivatives without having the expertise or proper guidance. They follow ‘tips’, SMS or calls on television from people whose job it is to generate brokerage fees. I am not against brokerage or broking houses, but it is time we look at the larger picture of fostering investments and, hence, wealth creation by translating savings into investments. The government is also aware of the same and has introduced a tax saving Rajiv Gandhi Equity Scheme.

If the investor is to be protected, we need to review the consent mechanism on a war footing. The very idea of someone cheating the system and paying a token fine and being let off is simply not acceptable. The principle should be of disgorgement of the illegal gain, followed by a fine and then exemplary punishment. If the offence is repeated, the fine and punishment should be multiplied or raised to substantially higher levels. On the issues regarding corporate governance, offences by companies should be looked into earlier than is being done. Remedial measures and resolution of complaints should be undertaken in a time-bound manner. Exchanges need to be strictly monitored but need not be given the status of a first-line regulator. If any exchange is found conducting misdeeds as in the recent case of name change of client code, a proper penalty should be imposed.

The investor needs to be protected. Without him, there would neither be a market nor an exchange.

The writer is founder, KRIS Research

Business

TBZ is a well-known and trusted jewellery retailer in India with 14 showrooms in 10 cities across 5 states, having a total carpet area of 48,818 sq ft. The company sells gold jewellery and diamond studded jewellery. Other products sold include platinum jewellery and jadau jewellery but their contribution to the total sales is not very significant. Of these 14 stores which include the flagship store in Zaveri Bazaar, 11 are large format stores having a carpet area of 3000 sqft or more and 3 stores are in the category of small format with a carpet area of 1000-3000 sq ft.

The company plans to open 43 new showrooms of which 25 would be large format and 18 would be small format. The total stores at the end of fiscal 15 would be 57 stores with a carpet area of 1.5 lakh sq feet spread across 43 cities in 14 states.

The company has a jewellery manufacturing unit at Kandivli in Mumbai and has set up another facility as well at Kandivli with a capacity of 1 lac carats per day per shift. The total carats produced in fiscal 2011 was 35,509 carats implying this capacity would be more than adequate for the entire expansion that has been planned in the next three years.

The company has a total of 1,192 employees. Of the total sales of Rs 11,939.31 million in 2010-11, 72.51% was from gold jewellery, 22.08% was from diamond studded jewellery and 5.41% was from others. This mix has improved in favour of diamond jewellery against others in the nine months period ended December 2011, where gold forms 72.48%, diamond studded 25.2% and others 2.32%. There are better margins in diamond compared to gold and it becomes imperative to improve the mix.

The objects of the issue

Financials

The revenues of the company have grown by 35% in the year 2010-11 over the previous year while in the current nine months ending December2011; they have grown at just under 25% assuming nine months annualised numbers. The net margins in the same period have improved significantly from 1.91% in 2010, to 3.35% in 2011 and still further to 4.5% in the nine months ending December 2011. This improvement or change in net margins may not be sustainable going forward as jewellery business is competitive in nature. It may however be prudent to expect margins to remain stable. There is also an element of inventory gain in these margins which has not been separately shown in the accounts of the company, looking at the way gold prices have been increasing in the last few quarters.

The company has a huge requirement of working capital and therefore pays a significant amount as interest. In FY10 it paid interest costs of Rs 196.08 million which was 116% of its net profit. This has come down significantly in the next year ending March 11 where thoughthe total interest paid has gone up to Rs 224.69 million, as a percentage of net profit it has almost halved to 56%. In the nine months period ended December 2011 the interest payment has again moved up to Rs 236.27 million and as a percentage of net profit reduced to 47%. Where the interest payments are so significant compared to the profits, the happiest group of people are the lenders to the company.
The EPS of the company for the year ended March 2010 was Rs 3.38 which has more than doubled to Rs 8.01 for year ended March 2011. For the current nine months the EPS is Rs 10.06 on pre-IPO equity which on a post-IPO and nine months annualised basis remains the same as the dilution of equity is also 33%.

Track Record of Merchant Bankers

IDFC Capital

IDFC Capital has handled a total of 12 issues in the period 2009-11 and no issues in 2011-12. Of these 12 issues at the end of one month of trading, six issues were trading higher than their issue price and six were trading below their issue price. If however one were to look at the closing price as of Friday the 20th of April, 10 issues are trading below their issue price and only two are trading above their issue price.

Avendus Capital Private Limited

Avendus has handled a total of 5 issues in the period 2009-2012. Of these five issues 4 were trading at a discount at the end of one month of trading while only on was trading at a premium. Based on prices of 20th April all five issues are trading at a discount. Avendus was also one of the merchant bankers who brought the issue of Shree Ganesh Jewellery. This issue was priced at Rs 260 and its close as of Friday the 20th of April was Rs 83.30. Previous issues need not reflect on the present issue but need to be kept at the back of the mind.

Comparisons

TBZ has chosen Titan Industries, Gitanjali Gems and Thangamayil Jewellery as its peers in comparison with other listed companies. Titan Industries has a huge presence all over the country and the brand Tanishq and the number of outlets are far in excess of what TBZ has and proposes to have. The company is a debt free company and has a turnover of over Rs 6,500 crs in the nine month period ended December 2011 and a net profit of Rs 455.47 crs. Its revenue in the year ended March 2011 was Rs 6,577 crs and its net profit 430.42 crs implying a net margin of 6.54%. Gitanjali Gems is the next company and had revenues of Rs 9289 crs for the nine months ended December 2011 with a net profit of Rs 384.34 crs. In the year ended March 2011 its revenues were Rs 9456.40 crs and net profit of Rs Rs 354.81 crs. The third company is Thangamayil Jewellery which had revenues of Rs 825.61 crs for the nine months ended December 2011 and a net profit of Rs 49.95 crs. The net margin was 6.05%. Its revenue in the previous year ended March 2011 was Rs 658.26 crs and a net profit of Rs 31.33 crs. The EPS was Rs 22.84 for the year and it is Rs 36.40 for the nine months ended December 2011. If one were to annualise the same it amounts to Rs 48.53.

Jewellery companies typically enjoy lower valuations than most other industries and the one exception in this field is Titan Industries. Titan is talked about as a retail and aspiration story which is why it commands the PE that it does. To expect that others would get a similar valuation looks a little farfetched currently. Gitanjali enjoys a PE of 5.92 while Thangamayil which has begun its growth story only in the last three years and now has 16 stores and all of its stores are typically in Tier 2 and tier 3 towns mainly in Tamil Nadu and South India, enjoys a PE of a mere 3.46 times.

Valuations
TBZ shares are being offered on a fully diluted nine months annualised basis at a PE of 11.93 at the lower end of the price band of Rs 120 and at a PE of 12.52 at the upper end of the price band of Rs 126. This is based on an EPS of Rs 10.06. The share in no way is cheap and considering the performance of the sector and the challenges with growth expecting immediate gains is certainly ruled out. Only investors willing to ride the share over the long term could look at the share.

Concerns
TBZ is a late entrant to the retail expansion. The brand is 146 years old but it took the company 134 years before it opened its second store. In fact in the last 12 years it has opened 13 stores and its plans to open 43 stores in 3 years looks like a tall order. There will be hiccups in rolling out the same. Secondly the inventory at each store needs to be funded. It requires about Rs 25-27 crs of inventory at the large store and roughly 8 crs at the smaller store.The company plans to open 25 large stores and 18 small stores which require approximately Rs 800 crs of inventory. There are also expenses involved in the opening of the store and the amount being raised from the IPO is about Rs 200 crs. Assuming that the investment in inventory and expenditure in roll out of stores would be spread out over the next three years it still implies additional borrowings of approximately Rs 450 to 500 crs which would impact the leverage and bottom line of the company.

Conclusion
TBZ is a late entrant into the business of jewellery retailing. It is an established brand but is co-owned by its other family factions and though the company is trying to create a separate image with “the original TBZ” the brand does get diluted. The valuations being asked for compared to similar companies is substantially on the higher side and leaves little or no room for any appreciation in the short to medium term. The massive expansion from 14 stores to 57 stores, implying quadrupling the store strength in a mere three years may not roll out in time as planned and also would need large capital infusion whether owned or borrowed. All these factors make investment in the company one of a long term and returns only after a couple of years. Investors willing to wait for the long term may apply for the issue, while those not having so much of patience may look at the issue once it is listed.

SEBI Disclaimer: – I do not intend to subscribe to the above issue

Friday began normally and the markets were chugging along with minor losses. At 10.40 am there was a trade triggered by algorithm which saw Infosys futures make a low of Rs 1,950 when the market price was Rs 2,400. The stock price bounced back in minutes and it appeared that this incident was unlikely to affect the day’s trade. How wrong we all were. Come 2.30pm there was a big hit on the NSE Futures this time. The current level was around 5,330 on the Nifty and about 5,300 the level of Nifty. There was yet another algorithmic order placed which saw the Nifty futures touch a level of 5,000. It sure affected the markets as it led to selling pressure and though the markets recovered substantial ground, the confidence of the market was shaken. It sure puts the stability of the market at stake when such programmed trading is done.

The weekend saw this subject being discussed at various places. Even I did some homework to find out who what happened. It appears a dealer at a foreign brokerage had to match a large order in Nifty. He place the order through an algorithm and the matching order was also placed but the timing of the same was a split second later. This difference of a split second saw multiple stop losses being triggered across the system and caused a near panic as the Nifty futures lost more than 6.5% in a couple of minutes.

Algorithm trade is allowed in the country but still is being viewed with a lot of scepticism world over. There have been instances of such trades leading to flash attacks on the exchanges where they are traded. Let us for a moment assume that instead of a genuine trade somebody punches a rogue trade. Imagine what havoc it could create and who would be responsible for the subsequent damage that it could cause to the exchange and the trading system. Let us assume another case where two different traders or dealers put different orders at the same time in the same stock or index. There could be a couple of second’s difference between their executions and as ‘algo’ trades seek pockets of liquidity they could attack the same pocket and technically cause price destruction.

One does not want technology to be taken away but if it can destabilize the marketplace one needs to be sure that a handful of people should not be allowed to rule the way markets behave. The two examples that happened on Friday and the one which happened in Mini Nifty in the first fortnight of April are indication of what Algorithm can do to the market. One hopes the exchange and the regulator take serious note of the same and bring in safeguards to protect the sanctity of the markets.

IVRCL Limited is in the news for the last few weeks. And, an interesting situation is developing, where a hostile takeover is in the process of being enacted. Subhash Goel of the Zee Group has acquired 32,769,000 shares or 12.27 per cent through Asian Satellite Broadcast Pvt Ltd, while the promoter holding is at a low 11.18 per cent. The possibility of a hostile takeover is looming large, and things were moving in that direction till Goel, after making an offer to buy out the promoter at Rs 90 per share, stated he would not buy more shares from the market. Is that a way to cool things off or a final stand only time will tell, but the price has softened for now.

Why the interest in IVRCL? Essel Infraprojects, a Zee Group company, is also in the business of infrastructure and has an order book of Rs 25,000 crore with roughly Rs 7,500 crore being from road projects. The present backlog of order book that IVRCL has is Rs 25,500 crore. Combine this, and it becomes a massive Rs 50,000 crore-plus.

Essel is currently cash-rich, and has strong cash flows from other businesses which can support future growth. IVRCL is overleveraged, and has therefore become vulnerable. Further, the promoter of IVRCL has not been able to increase his stake in the last eight years. By stepping into IVRCL, Essel gets an entry into Andhra Pradesh and then into Southern India, where Essel does not have any significant presence.

On the fundamental front, there has been an unexpected 50 basis point repo rate cut. This would lower interest rates sooner than later. Also, cement prices have begun to soften by Rs 300-400 per tonne, both of which are positive for the company and the infra space.

The performance of IVRCL has dropped significantly over the current year. Meanwhile, IVRCL has informed the stock exchanges that it has extended the current year ending March 2012, by three months. Now the company’s year-end would be June 2012 and results would be for the period of 15 months. This delays the AGM and gives more time to negotiate and resolve matters.

What makes this story interesting is that whenever there have been tussles where the present incumbent (promoter) does not have effective control, there is an opportunity for a hostile takeover.

In such cases, irrespective of the final outcome or settlement, investors who join the battle midway are seen to have benefitted. It is important that the holding of the incumbent should not be that of majority or near majority. An example: Great Offshore, where the promoter,Vijay Sheth, pledged his shares and had to transfer these to Bharati Shipyard when he was unable to pay the margin call. The holding of Sheth in the company was 15 per cent.

There was an open offer made by Bharati Shipyard, and then a hostile bid was made by ABG Shipyard as well. The open offer price was at Rs 344. This was revised to Rs 405 and then Rs 520 and finally Rs 590. The upward revision clearly resulted in benefit to shareholders from the third category, where they were neither the promoters or the intending acquirer.

The present shareholding pattern is evenly distributed between institutional investors who hold 42.52 per cent and non-institutional investors who hold 46.5 per cent. No battle for takeover gets over quickly and easily. There are many ups and downs and many near-misses. There are many games and strategies, which are employed in such takeovers.

As mentioned before, patient investors make money when there are two parties involved in a battle that does become ‘dirty’ at some point in time. Institutional investors will support or offer their shares to the highest bidder. Future growth prospects will get their vote. At the end of the day, they are also investors and need to make money. The only call they have to take is whether it is in their interest to cash out or stay invested. In such a scenario, I believe investors who have patience and are willing to weather denials, counter-denials and plenty of market upheavals will make money. The promoter, in this case, does not appear to have the wherewithal to sustain a hostile takeover. It would be upon the aggressor who has the money to decide as to how far he is willing to go for the takeover. There would be interesting days ahead for all investors.

article appeared in business standard on friday the 20th April

 
article appeared in business standard on friday the 13th April

Infosys as a practice declares its results between the 9th and 14th of the month and these results are declared well before trading begins for the day. Friday was no exception and this time the numbers were probably below what the street expected and the results were unsatisfactory. The share was quite steady and after the initial fall at open remained around the Rs 2500 mark till 1pm. There the stock cracked and it made the rest of the market crack as well. Call it the Infosys factor or Friday the 13th factor. The markets fell very sharply. , Infosys lost Rs 346.75 on a single day which contributed to 202 points on the SENSEX fall. All in all the weekly loss on Infosys was Rs 447 or 15.68%. The company has reported lower turnover compared to the December 11 quarter. The revenue is lower in rupee terms by 4.8% at Rs 8,852 crs and in dollar terms lower by 1.9% at $1,771 million. The company has also said that it would not increase salaries of its employees and this affected the company and the sector.

It is interesting to note that the Rs 250 fall in Infosys was digested by the markets and they remained in positive even after this fall. ITC, Reliance and Tata Motors kept the fall under check but very clearly it appears that there was basket selling around 2pm which led to this sharp crack.The whole market was affected by mid-afternoon and we had a huge fall by day end of 238 points and the intraday difference between the high low was 368 points. The contagion effect on the IT sector was witnessed with TCS losing Rs 108.80 or 9.23% to close at Rs 1069.55. Wipro lost Rs 18 or 4.10% to close at Rs 420.95. The BSEIT lost 11.14% for the week and has changed the sentiment in the markets from optimistic to one of confusion and being neutral.

The guidance given for the current quarter and year is one of a cautious nature and is betting on revival of fortunes in the US and European economies. The growth projected is however lower than that predicted by the IT industry association. The salary hike not happening could be underplayed with the same being postponed for the time being and being granted when there is better visibility. Industry is in a similar position and some companies have resorted to salary cuts, and as such it does not imply that employees would necessarily leave organisations.

Infosys has reacted sharply and this is the biggest fall in about nine years. The important thing to see would be whether results from other companies in the IT space give similar feelings or Infosys becomes a standalone case. The fall is likely to get arrested in the week ahead and one should not be surprised if there is a slow and steady recovery in the coming days.

It would be quite some time before one is able to say with conviction that it was Infosys or Friday the 13th which spooked the markets.