Indian stock losses to deepen next week on earning woes

Monday, 07 October 2002, 19:30 IST
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MUMBAI: Fears of bleak Q2 announcements from a string of Indian technology bellwethers are expected to add to the pressure on struggling blue-chip equities in the week ahead, say analysts and traders. A slew of corporate earning reports for the second quarter ended September 30 will be announced over the next couple of weeks. The earnings reports will be kicked off by technology giant Infosys Technologies on Thursday. It would be followed by a number of other heavyweights including Wipro and Satyam Computer Services announcing their results. "The market would be on a shaky ground when it resumes trading next week. Retail investors would prefer to cut their exposure on the bourse ahead of the announcement of results by Infosys," said a broker with the Bombay Stock Exchange. "We may also not see heavy fund activity in the days ahead. The investors would first analyse the data of the top technology companies before putting more money in the market," the broker said. In the week ended Friday, the widely tracked 30-share Bombay Stock Exchange sensitive index or Sensex closed at 2,930.51, a loss of 106.75 points or 3.5 percent from its previous week's close. The market had staged a moderate recovery last week after shedding 156.88 points or nearly five percent on across-the-board selling pressure in the previous three consecutive weeks. "The market hasn't touched its bottom yet and there isn't any positive trigger in sight that can take the index upwards. The lacklustre trade would continue for some time," said a fund manager with a foreign brokerage firm. "The market would also like to wait for the clouds to clear over the earnings of the technology leaders. The projections made by some of the companies isn't that bullish," he added. Infosys Technologies, the country's largest listed software exporter, had earlier projected a cautious business outlook for the July-September quarter despite posting robust revenue growth for the quarter ended June 30. The Nasdaq-listed Infosys had said the outlook continues to remain cautious due to "delays in client visits arising from adverse travel advisories and a challenging global business environment". The company's net profit for the quarter ended June 30 rose 14.2 percent over the same period last year on addition of new clients. Analysts say the market mood would also be dented on differences within India's coalition government over the gasping privatisation process even after Prime Minister Atal Bihari Vajpayee threw his weight behind the programme last week. The avalanche of criticism heaped on the process by some central ministers and the Rashtriya Swayamsevak Sangh threatens to jeopardise the reforms process. Vajpayee came out strongly Wednesday to the rescue of beleaguered Disinvestment Minister Arun Shourie, asserting that the privatisation process would continue. Under Shourie, a former World Bank economist who once edited a daily newspaper, the ministry launched a determined privatisation drive earlier this year, notching up a string of successful sales. The prime minister's assertion, however, has failed to silence the opponents of the process within the government and its other affiliates. In spite of the prime minister's assertion, Petroleum Minister Ram Naik and Defence Minister George Fernandes continue to voice their objections to the sale of public sector entities. In the holiday truncated intra-week trade ended Friday, the market closed in the negative territory on all the four trading sessions as investors dropped index heavyweight new and old economy counters. India's share and foreign exchange market were closed Wednesday for a national holiday to mark the birth anniversary of Mahatma Gandhi. The market also ignored encouraging data on the economy front. India's exports rose by 6.5 percent to $3.88 billion in August over the same month last year, mainly due to large orders from U.S. and European Union markets. In the old economy sector, Reliance Petroleum, India's largest private refiner, fell 8.1 percent to 21.40 and its arm Reliance Industries closed with a loss of 8.8 percent at 235.60 on institutional selling pressure. Reliance Industries Monday reported an audited net profit of 32.43 billion for the year ended March, its first annual result after the merger with Reliance Petroleum. Reliance, India's largest private sector company by sales, received final court approval earlier this month for its merger with Reliance Petroleum. The gross turnover of the merged company was 571.2 billion.
Source: IANS