Business | Markets
Bulls likely to dominate bourses ahead of Diwali
The Indian stock market is expected to take cue from the first batch of quarterly earnings numbers from a number of blue-chip companies, ranging from technology to banking and engineering to consumer goods, to be announced this week.
- By Unni Nair. Special to Gulf News
- Published: 00:00 October 8, 2006
The Indian stock market is expected to take cue from the first batch of quarterly earnings numbers from a number of blue-chip companies, ranging from technology to banking and engineering to consumer goods, to be announced this week.
Investors will head for hectic activity as Infosys Technologies, the country's second largest software services exporter, unveils its second-quarter results on Wednesday. The market expects it to come out with healthy numbers.
Information technology majors such as Tata Consultancy Services, Wipro and Satyam Computers are also expected to announce robust results in the next couple days. Other major companies that are expected to announce results this week include CMC, iGate Global, Apollo Tyres, BASF India, Castrol India, Crompton Greaves, UTI Bank, Crisil, Mastek and Container Corporation.
"Bulls may dominate bourses ahead of the Diwali festival. We expect Infosys results to provide a clear direction to the market this week," said a broker. "Banking, cement, automobile and technology stocks remained good picks".
In the week to Friday, the BSE Sensex lost 0.6 per cent to finish at 12,372.81 points. On the National Stock Exchange, the Nifty index closed at 3,569.70 points, down 0.5 per cent on the week. Both the Sensex and the Nifty suffered the first weekly loss after 10 weeks of gains.
The mood remained positive with investors building fresh positions in anticipation of strong quarterly earnings numbers. Firm global cues, sustained buying by foreign funds, cooling crude prices, stable interest rates and fresh support from local mutual funds are expected to drive the market to new heights before Diwali.
Foreign funds too remained upbeat after India maintained its position as the world's second fastest growing economy after China as rising consumer spending drove manufacturing output to a six-year high. A robust 8.9 per cent GDP growth in the April-June quarter has prompted the government to target a 10 per cent growth.
While major players do not rule out new highs before the auspicious Diwali trading session in the third week of this month, they feel the rally would be restricted to select sectors like cement, automobiles, banking and technology. Many on the street believe that a strong second quarter performance could trigger another bull rally.
Domestic mutual funds turned active buyers in frontline as well as mid-cap stocks.
According to rough estimates, local mutual funds are sitting on a pile of cash worth Rs75 billion, a little over eight per cent of their equity portfolios that add up to Rs775 billion at the current market value.
Cement shares
Cement counters saw brisk activity backed by a firm trend in cement prices and expectations that second quarter earnings would exceed market estimates. Cement prices have moved up around Rs10 per bag in most parts of the country since last month fuelled by the construction boom. Auto, pharmaceutical and cement shares emerged as best performers.
Six companies from these sectors found place in the top 10 performers in the benchmark index. The Tata Group has been buzzing with activity. Barely three weeks after taking a controlling interest in a leading US water company, Tata Tea has acquired a 33 per cent stake in South African firm, Joekels Tea Packers. The move will enable the Tata Group company, Tetley, to boost its presence in South Africa.
Tata Steel stole the limelight last week after it informed exchanges that it was in talks with Anglo-Dutch steel firm Corus Group for a possible acquisition worth $8 billion, a record for any Indian firm. Corus Steel is the ninth largest steel producer in the world with an annual capacity of 19 million tonnes.
Analysts expect Tata Steel stocks to gather further steam following the development.
The writer is a journalist based in India.
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