VR Logo

Results apprehension

Predictions abound as to where the Sensex is headed. But meanwhile, investors are jittery about July. A lot depends on what the quarterly results say and RBI's stand on interest rates.

This month is going to be extremely crucial for the markets. We will have to look out for the Reserve Bank of India's review to give an indication of the direction of interest rates.

But before that, we have an even more awaited event this week: the quarterly results. They should be kicked off with IT companies taking the lead as usual.

Following the rupee appreciation, IT companies will be closely followed. But the negativity has already been factored into the price. But if there is a "bigger-than-expected" shock from any of the IT majors, then the markets could correct.

Capital goods, engineering, construction, cement and infrastructure companies are expected to post strong bottomline growth. Banking, oil and gas, and metal stocks are also likely to do well. Not much is expected from the auto and sugar sectors.

Meanwhile, predictions abound as to what heights the Sensex can now reach. The Sensex PE was 23.06 when the index crossed 14,000 (December 5, 2006). At the end of Friday's trading (July 6, 200), the trailing PE was 21.24. However, the forward PE for the Sensex was between 17 and 18. What this means is that there is ample scope for the market to move on ahead. Of course, that is dependent on the growth of the economy and inflation being under control.