Fund inflows in market to pick up ahead of earnings season

Monday, 29 September 2003, 07:00 Hrs
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MUMBAI: Fresh inflow of investments in the Indian market is likely to gather steam in the week ahead, as local and overseas fund managers bet on robust corporate financial performance in the July-September quarter, say analysts.

Investors are expected to pour more money into the trading ring to pick up blue-chip equities on hopes that most of the heavyweight companies would post better than expected financial results for the quarter ending September 30.

"After staging a smart rally in the last few weeks on strong economic growth hopes, the market is all set to shift its focus on corporate results in the next week," said a fund manager with a foreign brokerage firm.

"The operators are likely to expand their position on select blue-chip new as well as old economy counters on hopes of improved financial growth in the current quarter," the fund manager told IANS.

"Hopes of better corporate results have gains ground on good rainfall all across the country this year. Companies are also likely to show signs of benefiting from an increased consumer demand in the market."

The stock market benchmark 30-share Bombay Stock Exchange sensitive index or Sensex closed for the week on Friday at 4,382.57, netting a gain of 165.45 points or 3.9 percent over its previous week's close.

The market had finished lower for the second consecutive week on September 19 after gaining nearly 20 percent in the previous seven consecutive weeks.

A host of blue-chip Indian technology and old economy firms will start unveiling their July-September financial numbers from the first week of next month, kicking off the crucial quarterly earnings season.

Infosys Technologies, India's largest listed software exporter, will fire up the earnings season by announcing its July-September quarterly result on October 10.

Market traders closely track quarterly and annual fiscal results of heavyweights like Infosys and consumer goods giant Hindustan Lever to get some clue about industry's overall health.

Analysts say a crucial cabinet meeting in the week ahead to discuss the future course of privatisation of state-run firms in the wake of a court decision will also influence the market mood.

The Cabinet Committee on Disinvestment would consider an "option paper" on October 3 to chart a roadmap for privatisation drive after the Supreme Court halted the sale of its equity in two state-run units.

In a major setback to the privatisation programme, the court last week restrained the government from selling its stake in Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) without parliamentary approval.

The government had planned to sell 35.2 percent equity in BPCL through public offer in domestic and international markets and 34.01 percent equity shares of HPCL to a strategic buyer.

The Supreme Court decision had triggered a large-scale sell-off in the stock market with shares of HPCL and BPCL sliding as much as 15 percent in a couple of days on profit taking.

"The government must chart a new roadmap for the privatisation drive otherwise it could face many more such court cases against the divestment of stake in public enterprises," said a broker with the Bombay Stock Exchange.

"If the government manages to clear the ambiguity created by the court verdict about the privatisation process, it would come as a big boost to stock investors," the broker added.

Disinvestment Minister Arun Shourie has said that his ministry would explore all options, including approaching the court for a review of the verdict.

In the intra-week trade ended Friday, the market opened for the week on a negative note with investors rushing to dump heavyweight equities in a highly volatile session.

The market, however, managed to stage a smart recovery soon after the Reserve Bank of India said it expected the Indian economy to post a healthy growth in the current fiscal year on a sharp increase in agriculture production.

The country's central bank said the Indian economy, Asia's third largest, would grow six percent in the current financial year up from 4.3 percent in the previous year.

The market mood was also boosted by reports that the foreign funds were stepping up their inflows in the domestic market on hopes of robust corporate financial performance.

Shares of ICICI Bank, one of India's fastest growing private sector banks, gained 8.6 percent over its previous week's close to touch 204.50 on fresh institutional buying.

Infosys Technologies ended 4.8 percent higher at 4,545.85 on hopes that the company would post better than expected quarterly results.
Source: IANS
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