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Market Cautious Ahead of Results

Stock markets ended the first week of the fiscal in positive terrain with technology shares hogging the limelight. Biocon and Power Trading Corporation made impressive debuts

Despite an overall lacklustre mood, the undertone in the markets remained positive for the second consecutive week with positive news coming from technology and banking fronts, ahead of the financial results due to be announced in the coming week. Technology heavyweight Infosys's announcement of a bonus issue or a stock split perked up the sentiment in the tech sector. Banking wasn't far behind either, with the Supreme Court's decision on the validation of the Securitisation Act, which allows banks and financial institutions to take over, dispose or sell the assets of companies defaulting loan repayment.

Consequently, the BSE Sensex closed the week with a marginal gain of 0.87 per cent to close at 5838 points, and the S&P CNX Nifty gained 0.68 per cent to close at 1853 points. Even the broader indices were up, with the S&P CNX 500 rising 1.19 per cent and the CNX Mid Cap 200 gaining 0.77 per cent.

The first trading day belonged to technology shares with rising expectations of better results from the technology heavyweights Infosys and Wipro. The BSE Sensex was smartly up by almost 50 points to close at 5838 points. Infosys announced the possibility of a bonus issue or stock split on Tuesday. Wednesday saw the BSE Sensex going down marginally to 5815 points. The IPOs of Biocon and Power Trading Corporation hogged the limelight on Wednesday after getting a favourable response from investors. On Thursday, the last trading day (Friday being a holiday), the spotlight was clearly on banking shares on account of Supreme Court's judgment on the Securitisation Act, giving more teeth to banks to recover their NPAs. Technology shares stood firm at the back of Wipro's announcement of a bonus issue.

The previous week's sustained rally was broken as investors turned cautious in view of revenue guidances expected from technology companies along with the annual numbers.

Among the sectoral indices, BSE FMCG Index was down 2.5 per cent on fears that HLL's performance would be severely affected in the wake of its aggressive price cutting strategies. The BSE IT Index rose 5.5 per cent on good news from software majors. The BSE Healthcare Index closed 2.6 per cent higher as pharma heavyweights performed well in view of the possibility that Indian companies would supply cheap anti-AIDS drugs as part of the UN and World Bank funded programmes backed by the Bill Clinton Foundation. ONGC and BHEL were instrumental in pushing BSE PSU Index by 1.7 per cent. BSE Bankex registered a slight fall of 0.7 per cent.

The average turnover for the week was Rs 7,464 crore, a 10 per cent rise over the previous week. FIIs chose to adopt a cautious approach, as most of the buying took place at the end of the last week of the previous fiscal. The net inflows were Rs 1,035 crore. Likewise, mutual funds too, were sellers through the entire week.

In global indices, NASDAQ followed the downward path witnessing a fall of 1.2 per cent after rising for two consecutive weeks. The Dow Jones too, was in red, losing almost 100 points in just 4 days closing the week down 1 per cent.

Outlook
With India Inc results starting next week, all eyes are set on technology giants Infosys and Wipro. The results from these and other companies should set the direction in the coming weeks.