Greece comfort buoys markets

Fri, 9 Apr Closing

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Markets decided to take a breather during the closing hours of trade today. However, gains witnessed during the earlier part of the day were enough to enable them to close strongly in the positive today. Thus, while the BSE Sensex edged higher with gains of around 220 points, gains on the NSE Nifty stood at around 60 points. BSE Midcap and Small cap indices also witnessed strong gains today as they edged higher by 1% each. Nearly four stocks gained for every one that declined on the Sensex today.

While most Asian stocks ended in the green today, Europe is also showing a positive momentum currently. The rupee was seen trading Rs 44.3 to the dollar at the time of writing.

Most of the losses that the markets witnessed yesterday were recouped today. And the protagonist behind the movement was not very different either. Yesterday's decline was marked by concerns with respect to Greece defaulting on its loans. However, Jean Claude Trichet, the president of European Central Bank came out in the open and declared that such concerns are overrated and Greece would indeed be able to pay its debts. The announcement cheered investors, who then chose to restart the rally of the last few days. Buying sentiment, especially in emerging markets, also improved because of another news item that said that emerging market equity funds drew the most net inflows in six months. This takes the net inflows for the year to a little below US$ 11 bn. Clearly, the markets look like they are in for a long one way ride.

Thanks to the buoyancy in markets, quite a few companies have retraced their all time highs. However, real estate companies would certainly be in a minority in that list. Quite a few of them have been thrown so far away from their peaks that retracing the same could still take a lot of time. But this state of affairs is doing nothing to deter companies from the sector from tapping the primary markets. Emaar MGF is a case in point. As per a leading daily, the company is planning to launch its IPO in the next 90 days. The company plans to raise Rs 35 bn through the issue. And like most real estate companies, Emaar too is saddled with debt of close to Rs 50 bn and hence, wants to use a majority of the IPO proceeds towards repayment of debt. Given the market environment, raising money from the IPO may not be a difficult task to achieve for the company. However, it remains to be seen whether the company creates long-term wealth for its shareholders.

Full year results season for the IT sector will get underway shortly with the sector behemoth Infosys slated to announce its results early next week. Analysts are also awaiting with bated breath the guidance that the company would provide for the coming financial year. However, Forrester Research, one of the leading knowledge bodies for the industry, has already given its verdict. It believes that the industry has started to recover from the economic downturn and will see worldwide growth this year. Forrester expects the US IT market to grow by 8.4% to US$ 550 bn whereas the worldwide tech market is expected to log in a growth of 7.7% for the current calendar year. Good news for the Indian IT exporters indeed.