Oct 12, 2002|
Long term positive
The bourses globally had a great week. While both the Sensex and the Nifty gained over 2% each, the Wall Street too recovered. The Dow finished with over 4% gains and the NASDAQ was up over 6% during the week. But are these gains here to stay?
This week 20 counters finished in the positive from the benchmark BSE Sensex and 32 counters gained on the NSE Nifty. The software counters largely led the positivism. These included Infosys, Wipro, Satyam, Digital and NIIT. Pivotal Infosys logged in a 15% topline growth sequentially in 2QFY03 to beat market expectations. While the company has not changed itís net profit guidance, it has raised the revenue guidance. Earlier Infosys had indicated of a 19% to 23% growth in revenues. However, now it expects revenues to grow in the range of 32% to 33%. The net profits are expected to grow in the range of 16% to 19% in FY02. Infosysí sterling performance along with that of Mphasis and Hughes Software perked sentiment on the domestic tech sector.
However, buying at lower levels in key index heavyweights like Reliance, Tata Power, Bajaj Auto, Hero Honda, Telco, Ranbaxy, Dr. Reddy, Cipla, Novartis, Gujarat Ambuja, L&T and ACC also aided in indices gaining overall. The buying pattern suggests that investors found the valuations attractive over the long term and took advantage of the continuous hammering of heavyweights over the last month to get in at lower levels.
On the other hand, the spurt on the Wall Street largely came in during last nightís trading. There also the trend suggests that investors may have been attracted by the low stock prices. However, there is a big difference. While India Inc. continues to grow decently even in a difficult economic environment like this, the US continues to be hit by earnings warnings, accounting scandals and is probably in a recession. No doubt, India has a long way to go before it is even mentioned in the same breath as the US in terms of economic progress and development, but the truth is that the Indian economy is growing, albeit not at the desired rate.
Going forward, the earnings season is likely to determine the short-term movement on the Indian bourses, however over the longer term, we remain positive on the strengths of India Inc.
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