Market Outlook: Bears set to tighten grip on Indian market
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Market Outlook: Bears set to tighten grip on Indian market

Monday, 28 October 2002, 08:00 Hrs
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MUMBAI: With India's key share market index closing sharply lower for the week ended Friday, there is little hope that the coming sessions will bring any cheers to bruised investors in the absence of any buying trigger.

Analysts say as the torrent of corporate earnings season slows to a trickle in the days ahead, investors would take a pause and analyse the company financial numbers before putting money on blue-chip shares.

"The market has slipped sharply lower in the last week's trade on dismal quarterly earning reports. I don't think the coming sessions are going to be any different," said a fund manager with a foreign brokerage house.

"The bearish trend is likely to intensify further in the post-earning season as investors, who were disappointed by the financial performance of blue-chip firms, stay on the sidelines awaiting some positive trigger," the fund manager told IANS.

The corporate earnings season, which was flagged off in style by tech bellwether Infosys Technologies earlier this month, is slowing to an end on a negative note with most of the old economy heavyweights announcing lower-than-expected results.

The poor financial performance by companies such as Hindustan Lever and HCL Technologies pushed the market index down to a yearly low in the intra-week trade ended Friday.

The Indian stock market barometer 30-share Bombay Stock Exchange sensitive index or Sensex closed Friday at 2,875.53, a loss of 134.23 points or 4.46 percent from its previous week's close.

Institutional investors as well as local operators have been selling aggressively in the prevailing bearish market as a result of which several stocks have been touching new 52-week lows consistently for the last few days.

As many as stocks of 96 companies have hit their 52-week low level and the list includes heavyweights such as Hindustan Lever, Reliance Industries, Dr. Reddy's Laboratories and Videsh Sanchar Nigam Ltd.

"Though most of the top rung counters have come down to attractively lower levels in the recent selling spree, but I don't expect a bargain hunting at this stage. The investor mood has turned very bearish," said a broker with BSE.

Analysts say the market operators would also track the mid-term monetary and credit policy to be announced by the Reserve of Bank of India (RBI), the country's central bank, in the week ahead.

RBI will announce its policy Tuesday. Finance experts expect the central bank to lower the country's economy growth projection for the year ending March and announce a cut in the key bank rate to boost credit off-take by corporate houses.

In the intra-week trade ended Friday, the market opened slightly lower, as domestic mutual funds and select foreign institutional investors booked profit in blue-chip technology counters after the earning inspired rally.

It kept losing ground for better part of the trading week with investors paring exposure on the bourse after some technology companies unveiled dismal July-September quarterly results and projected gloomy outlook for the full-year.

The market operators also booked profit ahead of the announcement of results of top-rung old economy companies on fears that most of the firms would post lower-than-expected numbers due to a drop in sales in the rural areas.

A severe drought in large parts of India has reportedly hit sales of consumer goods and led to concerns that lower rural incomes would hurt corporate earnings in the current fiscal.

Analysts say lack of fresh inflows from foreign institutional investors, the backbone of India's liquidity starved equity market, has also dampened the market sentiment.

Foreign investors, the backbone of India's liquidity starved equity market, Tuesday pulled out a net 86 million after pulling out 444 million Monday, the figures compiled by the market watchdog showed.

In the old economy sector, shares of consumer goods giant Hindustan Lever led the sell-off. The shares of Hindustan Lever, which has more than 15 percent weightage in the 30-share index, came under the hammer after it posted dismal numbers.

Hindustan Lever unveiled a disappointing 3.5 percent rise in third-quarter profit Friday. Net profit rose 4.13 billion or 1.88 a share in July-September, from 3.99 billion or 1.81 a share a year earlier.

Shares of Hindustan Lever closed the week by touching a near four-year low at 160.95, a loss of 8.8 percent from its previous week's close.

HCL Technologies, India's fifth-largest software exporter, lost a whopping 25.4 percent from its previous week's close to 163.75 after it posted a lower-than-expected quarterly result due to a sharp fall in other income.

The firm said Tuesday its consolidated net profit fell 22.3 percent to 760.3 million in the July-September quarter, down from 978 million last year.

The dismal quarterly performance of HCL Tech comes close on the heels of tech bellwethers Infosys Technologies and Wipro announcing robust result for July-September quarter and projecting bullish near-term outlook.
Source: IANS
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