Indian investors to focus on corporate results in week ahead

Monday, 22 September 2003, 07:00 Hrs
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MUMBAI: India's stock market investors are likely to shift their focus to quarterly financial results of blue-chip technology as well as traditional companies in the week ahead after the recent bull-run.

Analysts say the market, which has smartly rallied for the better part of the trading sessions in the last few months on hopes of sharply higher economic growth, may gain further momentum on an expected better financial performance by firms.

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 quarterly earnings season.

"In the coming sessions, talk of quarterly earnings will take precedence over all other things. The market will be swayed by speculations on this front," said a fund manager with a foreign brokerage firm.

"Investors will enlarge or pare their exposure on heavyweight counters depending on market projections about the companies' financial performance in the July-September quarter," the fund manager told IANS.

The stock market barometer 30-share Bombay Stock Exchange (BSE) sensitive index or Sensex closed for the week on Friday at 4,217.12, a loss of 88.79 points or 2.06 percent from its previous session's close.

The market finished lower for the second consecutive week after gaining nearly 20 percent in the last seven consecutive weeks on hopes that a sharp economic rebound in the current fiscal year would boost corporate financial results.

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.

"Hopes of robust corporate performance in the July-September quarter has really gained ground after all parts of the country received good monsoon rains this year," said a broker with the BSE.

The prospects of sharply higher economic growth in the current fiscal year boosted by normal monsoon rains across the country have enthused share market investors in a big way in recent months.

The Reserve Bank of India, the country's central bank, said last month the earlier economic growth projection should now be enhanced significantly in the light of the expected strong agricultural recovery.

The foreign funds are betting on higher Indian economic growth in the current fiscal year, helped by normal distribution of monsoon rainfall all across the country.

The quantity of rainfall in the June-September period is crucial for the farm sector that accounts for nearly a quarter of the gross domestic product and employs 70 percent of the country's over one billion population.

Foreign institutional investors, who act as the backbone for India's liquidity starved capital market, have pumped in over $2.8 billion into the Indian stock market so far this year, compared to just $740 million in 2002.

In the intra-week trade ended Friday, the market opened the week on a negative note with investors rushing to pocket gains on heavyweight counters after sharp recent gains.

The market slipped sharply lower in the intra-week trade after the Supreme Court restrained the government from selling its stake in public sector Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) without parliamentary nod.

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 verdict came as a blow to the government's efforts to raise money through the sale of its stake in public sector companies to rein in the spiralling fiscal deficit.

The government had planned to raise 132 billion in the fiscal year ending March 31, 2004, through the divestment route. So far, it has managed to raise only a fraction of that.

The market, however, managed to erase some part of its losses on Friday, as the index bounced back from lower levels on institutional bargain hunting in blue-chip stocks.

In the old economy sector, shares of HPCL tanked 17.8 percent to 348.50 and BPCL closed with a loss of 7.5 percent from its previous week's close at 320.70 after the court ruling.

Source: IANS
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