Stockmarkets: Look ahead!

The markets finally ended last week with minor gains, despite not so great results by technology major Tata Consultancy. Of course, Wipro (WIPRd.BO, news) proved to be the redeeming factor. With result season unfurling in full swing, there is much to look out for this week.

Most of India Inc. will announce their corporate scorecard for FY05 this week. FMCG, pharma, energy, cement, steel and engineering majors will face the investor test this and the following week. But it is not FY05 performance that investors will eye keenly, it is the next year and after that, which will set the tone.

In an inflationary environment, with interest rates set to harden, India Inc. may be looking at a slower revenue growth, as compared to FY04 and FY05, higher depreciation and interest outgo (owing to enhanced capex). While this does not mean that companies will show no bottomline growth, it may indicate a slowing rate of bottomline growth.

In another development, while news of a 'normal' monsoon is good for the overall economy, it will be particularly interesting to see whether FMCG demand is finally picking up or not. If it does show some signs of a pick up, the FMCG sector may be able to outperform sector peers going forward. But good monsoons will also spell a decent GDP growth of 6% at least.

All in all, it's a mixed bag. You the investors will do well to tone down your return expectations and look to build your portfolio with a long-term view. If your stocks achieve the target price earlier, do have the discipline to exit, whether it is short or long term. But the logic should always be to put in your investment with an idea that it could remain locked for a few years.

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