Jan 13, 2001|
Markets overlook tech results…
The stock markets, which surged in the first week of the new year, retreated significantly shaving almost all the gains registered in the previous week. With the earlier rally being momentum driven a correction on the bourses was expected. The current week saw a decline in the domestic bourses despite the tech laden NASDAQ registering significant gains. The Indian benchmark indexes, BSE and NSE, were down 147 points (3.5%) and 41 points (3.1%) respectively.
Despite tech companies declaring impressive performances' the stock prices have remained static. A tech overhang from the western markets has prevented any positive movement on these counters. The week saw the tech heavyweights, Infosys and Satyam, declaring their third quarter results. Both have reported a bottomline growth in excess of 140%, however, it failed to enthuse the markets. This could indicate that the markets have already discounted such meteoric growth rates; consequently, any positive surprise element is minimal. Further, it could imply that the markets are yet skeptical about the future growth potential of tech companies and hence are re-rating the sector's prospects.
The finance minister in a convention has stated that the Government will provide several sops to the petroleum sector to boost foreign investments. He also indicated that the original administered pricing mechanism (APM) dismantling schedule would be adhered to. The original schedule envisages dismantling the APM by March 2002. In fact, there is also some news that the scheduled dates maybe brought forward. Further, the minister also said that the Government would disinvest from the oil PSUs bringing down its stake to 26%. However, it will keep control of few strategic companies, which include IOC, Gail and ONGC. The announcement led to a bull run in refinery stocks on the last trading day of the week. Pivotals, HPCL and BPCL, gained sharply on this news.
Entering the fourth quarter the markets are keenly awaiting announcements of the third quarter results, which could be a key driver. The markets could also be building up expectations of the coming budget.
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