The Sensex has been moving in a narrow band over the last fortnight. The trend seems to be still uncertain despite better than expected quarterly results from old economy giants. Meanwhile, world markets have also remained subdued.
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Asian Paints, HLL and ICICI Bank (ICBK.BO, news) recorded strong quarterly performance. On the other hand, numbers from Indian Hotels, P&G, Colgate (COLGd.BO, news) and Corporation Bank discouraged markets. Tech stocks meanwhile, continued to plunge taking cue from the falling NASDAQ.
Dwindling corporate earnings and bleak future outlook has pulled down the US markets. Investments bankers are also cautious about investing in tech stock even though these stocks have fallen significantly from their highs. While Pfizer Inc. posted a strong rise of 21% in fourth quarter operating profits, DuPont, the No. 1 US chemical company recorded a 75% drop in earnings. Weaker commodity cycle and low demand have impacted performance of companies worldwide. Merrill Lynch, one of the largest investment bankers too reported a net loss of US$ 1.3 bn.
Performance of Indian companies on the other hand is comparatively better. This is also reflected from increasing fund inflows from foreign institutional investors (FIIs). Since the beginning of 2002, FIIs have remained net buyers in Indian equity markets to the tune of Rs 8 bn.
Activity in the markets in short term is likely to be concentrated around companies declaring their quarterly results. Gujarat Ambuja, Tata Power (TTPW.BO, news) , Tisco and ICICI (ICICp.BO, news) are some of the key companies, which are expected to come out with their quarterly scores today.
Auto stocks have witnessed a sharp run up in the last one-month, in expectations of monsoon effect on bottomline numbers. However, the rally could fizzle away, considering the prevailing uncertainty, as market movers are likely to take opportunity to book profits at higher levels.
