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Markets: Indian investors brace for another week of lacklustre trade
Monday, 12 May 2003, 19:30 IST
MUMBAI: Investors looking for signs that the bearish market trend is on the mend would have to wait for at least a couple of weeks, as the absence of a positive trigger is likely to keep the index tightly capped in the days ahead.
Analysts and market traders say though a sharp slide in blue-chip shares would be cushioned by selective buying interest, the overall market mood would continue to be bearish in the absence of large-scale fund buying.
The market index has been moving within a close range for the last couple of weeks after the annual and quarterly corporate earnings season failed to enthuse the investor sentiment with most of the heavyweight firms posting lacklustre results.
"The retail investors have been keeping off the market after the meltdown in the technology sector and that has kept the market in a range-bound mode for all this weeks," said a fund manager with a foreign brokerage firm.
"I expect the trend to continue in the days ahead in the absence of any positive trigger that can motivate investors to take up fresh position on counters of heavyweight equities," the fund manager added.
The market barometer 30-share Bombay Stock Exchange sensitive index or Sensex closed the week on Friday at 2,950, a loss of 16.63 points or 0.56 percent from its previous week's close.
Selling on technology stocks was triggered a couple of weeks' ago after India's two leading software makers - Infosys Technologies and Wipro - admitted that pressure on prices would continue to damage margins in the months ahead.
The first batch of quarterly results, particularly from technology companies, has turned out to be disappointing.
The financial performance of companies like Wipro and Infosys is treated as the barometer for India's high-profile software industry's health.
Analysts say shares of technology companies may witness fresh round of selling pressure in the days ahead on fears that slowing revenue growth of software companies would get further squeezed by the rising Indian rupees.
The rupee closed at 47.18/19 per dollar on Friday, sharply up from its previous day's 47.23/24.
"The rising rupee will trigger a panic among investors in software companies who are already battling stiff billing pressure and sharply lower new customer orders," said a broker with the Bombay Stock Exchange.
A bullish outlook for the rupee in the short to medium-term would badly hurt India's export-oriented software services exports in the quarters ahead.
India's IT exports, which includes software development and services businesses, are estimated to have grown nearly 26 percent in the year ended Mach 31, 2003, down from a projected 30 percent growth.
The Indian rupee has gained nearly five percent against the U.S. dollar and that will bring down the exports growth to 26 percent from an earlier projected 30 percent, according to the National Association of Software and Service Companies.
The market sentiment may, however, get a boost in the days ahead following some positive announcement on the government's privatisation front and robust financial result announcements by heavyweight companies like Bajaj Auto.
In the intra-week trade ended Friday, the market opened the week on a positive note with institutional investors rushing to pick up stocks of banking and badly beaten technology companies.
Strong gains in shares of automobile companies and increased foreign fund inflows also boosted the investor sentiment.
The market, however, couldn't hold on to its gains for long with investors rushing to take profit in stocks of banking and select old economy companies after sharp gains in six-consecutive sessions, running till Tuesday.
In the old economy sector, Reliance Industries, India's largest private sector conglomerate, lost 4.6 percent to touch 
260.95 on sustained institutional selling pressure.
The Reliance counter came under the hammer on reports that a court may summon its top officials in a case relating to classified government documents.
"Reliance has always fully complied with laws and regulations operating in the country," said the company. "It fully respects sanctity of legal process."
State Bank of India, India's largest commercial bank, rose 1.5 percent to 285.60 on reports that the bank may get around 7 billion as a portion of outstanding dues from a securities scam in 1992.
In the technology sector, Wipro, India's most valuable software maker by market capitalisation, ended 2.6 percent higher at 890.95 on rumours that it had bagged a huge overseas order. The company refused to comment on the speculation.
Source: IANS
260.95 on sustained institutional selling pressure.
The Reliance counter came under the hammer on reports that a court may summon its top officials in a case relating to classified government documents.
"Reliance has always fully complied with laws and regulations operating in the country," said the company. "It fully respects sanctity of legal process."
State Bank of India, India's largest commercial bank, rose 1.5 percent to 285.60 on reports that the bank may get around 7 billion as a portion of outstanding dues from a securities scam in 1992.
In the technology sector, Wipro, India's most valuable software maker by market capitalisation, ended 2.6 percent higher at 890.95 on rumours that it had bagged a huge overseas order. The company refused to comment on the speculation.
Source: IANS