Indian shares to track quarterly results in week ahead

Monday, 30 September 2002, 07:00 Hrs
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MUMBAI: The stream of quarterly corporate results to be unveiled over the next couple of weeks are likely to steal the spotlight on the Indian bourses in the week ahead, as investors search for signs of the elusive industrial recovery.

Analysts and traders say India's key share market index may surge slightly higher in the coming sessions as investors bet on improved profit outlook of companies in the technology and old economy sectors for the July-September quarter.

A slew of earnings reports, for the quarter ending September 30 of blue-chip companies such as Infosys Technologies, Wipro and consumer goods giant Hindustan Lever will be announced over the next few weeks.

"Corporate results will be the flavour of the coming week. There aren't any other triggers in sight that can excite the cautious investors," said a fund manager with a foreign brokerage firm.

"The investors are very bullish about the profit outlook of most of the blue-chip firms, so we can expect the shares to move slightly higher as we enter into the earnings season," the fund manager said.

Dealers say that the domestic mutual funds and foreign institutional investors would scrutinise quarterly earnings reports and analyse their profit projections for the future in the days ahead.

For the week, India's stock market benchmark 30-share Bombay Stock Exchange sensitive index or Sensex closed at 3,037.26, netting a moderate gain of 12.91 points or 0.42 percent over its previous week's close.

In the last three weeks, the market index has shed 156.88 points or nearly five percent on across-the-board selling pressure.

Investors expect an improved performance by old economy companies during the July-September quarter, after the fears of a severe drought in some parts of the country abated with the arrival of late monsoon rains.

The late rains have helped bring down the monsoon rainfall deficiency from 25 percent toward July end to 19 percent at present.

Summer monsoon rains account for 80 percent of the rainfall in the country that depends heavily on agricultural production for overall economic growth. Increased agricultural production also triggers an increase in demand for consumer goods.

India's economy registered a growth of 5.4 percent in the financial year ended March 31, compared to a moderate four percent growth logged during 2000-01, the figures showed.

The higher gross domestic product (GDP) growth for 2001-02 was achieved mainly because of a strong agricultural sector growth, showed the figures compiled by the Central Statistical Organization.

"The investors are also betting on improved performance of the IT companies after some of the companies announced the bagging of huge outsourcing orders in the last few months," said a market analyst.

"But more than the past results, the investors would scrutinize companies' profit projections for the short to medium term before putting money on the counters," the analyst added.

In intra-week trade ended Friday, the market opened sharply lower as investors booked profit on technology counters on fears of fresh sell-offs on Wall Street ahead of the earnings season.

Domestic stock markets closely track movements on Wall Street as the U.S. accounts for over 60 percent of India's software exports.

U.S. companies, ranging from telecom gear-maker JDS Uniphase to retailer Wal-Mart Stores, warned results might miss or be at the bottom of market expectations.

After staging a moderate recovery in the intra-week trade, the market kept wobbling in the negative zone for the better part of the weekly trading sessions.

The sentiment on the bourse was dented by a shootout in a temple in Gujarat that stoked fears of communal violence in the country.

Elite Indian commandos early Wednesday stormed the Swaminarayan temple, gunning down two terrorists and ending a 14-hour bloody siege that left 27 people dead and numbed the country.

Nearly 50 commandos were flown in from New Delhi for the operation.

At least 25 people, including women and children, were killed and nearly 100 injured in the temple bloodbath that sparked fears of renewed communal violence in Gujarat, which has seen terrible sectarian violence this year.

In the old economy sector, stocks of cement companies fell on sustained selling pressure on fears of cement prices remaining subdued in certain pockets of the country with faltering demand and overcapacity in the industry.

Engineering and cement major Larsen and Toubro fell 6.8 percent from its previous week's close to 169.90 and Gujarat Ambuja Cements closed with a loss of 2.3 percent at 166.20.

Source: IANS
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