Indian
Markets Outlook for the week (09 - 13.07.2012)
Key indices are likely to move in
a thin band early next week as investors will stay on the sidelines before the
Apr-Jun earnings of Infosys and Tata Consultancy Services on
Thursday. Aution ahead of industrial production data for May, which is
also due on Thursday, will keep volumes low and trade choppy. Yesterday, the
combined turnover in the cash segments of the BSE and National Stock Exchange
was around 119 bln rupees versus 130 bln rupees on Thursday. As the
earnings season begins, expecting a poor show from India Inc, which is
plagued by weak demand environment and high interest cost. The headline
profit growth for 1QFY13 (Apr-Jun) for Sensex companies is likely to be
13.7%. Secondly, sales growth is expected to start dragging earnings while
margins stabilize at lower levels, aggregate Sensex (operating) margins are
expected to show a drop of 115bps (basis points) to 16.7%.
In particular, energy, metal, and
telecommunications companies are likely to report a fall in margins. On
Monday, overseas markets will lend cues to investors. US index
futures were trading weak ahead of June non-farm payrolls data later
yesterday. The Nifty holding above the key 5300 level is likely to keep
the index positive in coming sessions. However, any negative surprises from
Infosys or TCS in their Apr-Jun results could lead the index to slip below its
key support of 5250. We see 5200-5400 as the broad trading range for the index
next week. Stocks of information technology companies are likely to remain
subdued for most part of the week as investors will assess the results of
sector leaders Infosys and TCS before taking any significant
positions. Also, more than the quarterly results, outlook of the two
companies on demand will be keenly eyed. We fear that Infosys, which had
cut its revenue outlook in April, may again lower its projection. In
April, the company had said it expects dollar-denominated revenue to grow by
8-10% in 2012-13 (Apr-Mar) compared with expectations of 11-14%. Any negative
surprise from Infosys or TCS in the demand environment could lead to a
de-rating of not only their stocks but the entire technology sector. Apart from
Infosys and TCS, IndusInd Bank and Housing Development Finance Corp will be in
focus next week as they release their Apr-Jun results.
owing v � r c � @ in the stock.