Absence of buying trigger to keep Indian market index range-bound

Monday, 28 April 2003, 07:00 Hrs   |    1 Comments
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MUMBAI: India's blue-chip share market index is expected to move within an extremely close range in the days ahead, as investors stay on the sidelines in the absence of any positive buying trigger.

Analysts and market traders say as the corporate earnings season draws to a close on a lacklustre note, investors would prefer to sit on their cash pile and wait for a positive trigger to take the stocks forward.

"The corporate earnings season, which is entering into final phase now, has failed to lift the market mood. Investors are looking forward to some trigger that can revive buying sentiment," said a fund manager with a foreign brokerage firm.

"I think the market would continue to be range-bound in the days ahead. In the short-term, there aren't any positive trigger in sight that can fuel share buying," the fund manager told IANS.

"Lack of any significant trigger on the economy front and the prevailing concern over the spread of SARS (Severe Acute Respiratory Syndrome) in the Asian region and its economic fallout would also weigh on the investor mind."

The stock market barometer 30-share Bombay Stock Exchange sensitive index or Sensex closed on Friday at 2,924.03, a loss of 60.47 points or 2.02 percent from its previous week's close.

Analysts say lack of increased foreign fund activity on the bourse will also restrict any upward movement in the market index. Foreign institutional investors reported net inflows of a meagre $29.7 million during the week to Thursday.

"While the general selling pressure on technology counters, which has been witnessed in last couple of weeks' trading sessions, may settle down a bit, the overall market mood would continue to be bearish," said a market analyst.

Selling on technology stocks was triggered a couple of weeks' back after two India's leading software makers - Infosys Technologies and Wipro - admitted that pressure on prices would continue to damage margins in the months ahead.

The financial performance of companies like Wipro and Infosys are treated as the barometer for India's high-profile software industry's health.

Experts say the softening demand and intense pricing pressure would ensure that the differential annual profit growth rate between the once robust IT and other sectors is not going to be as high as before in the years ahead.

In the intra-week trade ended Friday, the market opened the week on a positive note, as institutional investors rushed to pick up stocks of old economy companies on hopes most of the heavyweight firms would post robust quarterly results.

The market index, however, failed to hold onto its gains and finished lower in the next session with investors rushing to take profit ahead of the unveiling of blue-chip companies' financial results.

The market kept slipping lower for the remaining part of the trading week, as the quarterly financial numbers of blue-chip companies such as Reliance Industries failed to meet market expectations.

The market index finally ended at a six-month low, as investors rushed to book profit after Reliance Industries disappointed the market with a lower-than-expected quarterly financial performance.

"Investors were looking forward to Reliance's results for some positive buying trigger. But sadly this (the results) comes as another blow to the already sagging investor sentiment," said the market analyst.

Reliance Industries Ltd., India's largest private sector business conglomerate, Wednesday said its fourth-quarter net profit rose 41 percent, helped by a rise in the prices of its products.

The company's profit for the fourth quarter ended March 31, 2003 touched 11.01 billion while gross sales rose 32 percent to 176.79 billion. The numbers, however, fell short of market expectations.

Reflecting the bearish sentiment, shares of Reliance fell 3.6 percent from its previous week's close to 268.15.

In the tech sector, Hyderabad-based Satyam Computer, however, boosted the market sentiment on technology counters Thursday by projecting a better-than-expected business outlook in the months ahead.

Satyam Computer, the nation's fourth largest software services exporter, forecast earnings per share of 15.65 to 16 in the current year, a growth of seven to10 percent from the past year.

Shares of Satyam closed with a gain of 13.7 percent over its previous week's close at 164.00, after rising as much as 10.8 percent in the intra-day trade.
Source: IANS
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