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Economic optimism to keep Indian market steady in week ahead
Monday, 11 August 2003, 19:30 IST
MUMBAI: India's blue-chip equities are expected to derive strength in the week ahead from projections that the country's economy would post a sharply higher growth in the current fiscal year on the back of improved farm output.
Analysts and market traders say after the end of a robust corporate season the investor hopes on the economic front would keep shares of heavyweight companies steady in the week ahead.
"The market seems to be in for a never-ending bull run, thanks to a string of positive news that are entering the trading ring one after another," said a fund manager with a foreign brokerage firm.
"Just as the improved corporate earnings season was threatening to give way to a brief period of lull on the bourses, reports of economy's gradual growth in the current fiscal has come as a positive trigger," the fund manager told IANS.
"Coupled with optimism on the economic growth front, sustained high-level of fund inflows into the market is also expected to propel stocks to sharply higher levels in the week ahead."
The stock market benchmark 30-share Bombay Stock Exchange sensitive index or Sensex closed for the week on Friday at 3,883.76, netting a gain of 68.45 points or 1.79 percent over its previous week's close.
Hopes of enhanced economic growth in the current fiscal gained momentum after the government last week projected a bullish outlook for the country's economy in the current financial year.
India's economy would achieve a robust growth in the current financial year following normal monsoon rains in the country, Finance Minister Jaswant Singh said Thursday.
"The economy is on a growth path and that is in conformity with the budget projections," said Singh, while presenting a quarterly review on the economy to Parliament.
"The monsoon has so far progressed well with 86 percent of the metrological subdivisions receiving adequate rainfall by July 23. Latest forecast predict 98 percent of the long-period average rainfall," he said.
The agriculture sector, which depends heavily on the monsoon rains, accounts for a quarter of India's total output and employs more than two-thirds of its billion-plus people.
Metrological department officials say the June-September monsoon is expected to be close to normal this year after below normal rains last year, when the country faced the worst drought in three decades.
Buoyed by normal rainfall, economic think tanks have started revising projections for economic growth in the current fiscal year to 6 and 6.5 percent, up from previous forecasts of between 5 and 5.5 percent.
"Higher economic growth would not only mean improved industrial performance but it will also attract scores of foreign fund to the Indian market," said a broker with the Bombay Stock Exchange.
"At a time when most of the Asian economies are projecting a gloomy economic outlook for the current year, talks of higher growth in India will definitely make it a favoured investment destination."
Foreign funds, which act as the backbone for India's liquidity starved capital market, have invested $89 million in Indian equities in August, after committing $1.3 billion in the preceding three months.
An industry survey report said last week India would continue to be an attractive investment destination for international fund managers in the coming year.
Brushing aside expectations of a technical correction tightening its grip over Indian market, the market opened the week on Monday on a positive note for ninth consecutive day on buying in select old economy counters.
The market, however, failed to hold on to its gains for long and the benchmark index slipped in to the negative zone Tuesday as investors rushed to book profit after sharp gains in the last few sessions.
Although the market was expected to witness technical correction for quite some time after the bull-charge, sustained fund inflows into the market helped the benchmark index to bounce back soon.
In the old economy sector, Tata Motor, the auto arm of the conglomerate Tata group, rose 2.8 percent over its previous week's close to 
245.50 on reports that it sold 24,995 vehicles in July, a rise of 38 percent over last year.
Consumer goods giant Hindustan Lever rose 0.4 percent to 168.20 on hopes that improved economic growth in the country would boost the sale of company's products all across the country.
Source: IANS
245.50 on reports that it sold 24,995 vehicles in July, a rise of 38 percent over last year.
Consumer goods giant Hindustan Lever rose 0.4 percent to 168.20 on hopes that improved economic growth in the country would boost the sale of company's products all across the country.
Source: IANS