The market may remain upbeat as investors make token purchases on the Muhurat trading day today to mark the beginning of the new Samvat year as per the Hindu calendar. A special one hour Muhurat trading session will be held today, 17 October 2009, between 18:15 to 19:15 IST to pay obeisance to Lakshmi the Hindu goddess of wealth and prosperity. The market remains closed on Monday, 19 October 2009 on account of Diwali. Sensex ended Samvat 2065 (the year according to the traditional Hindu calendar) with a gain of 8,812.80 points, or 103.56 % at 17,322.82, over Samvat 2064. Foreign fund inflows and the recent bullish trend in the global markets kept the market on a firm note.
India's largest IT exporter by sales Tata Consultancy Services (TCS) will be in action after company announced after market hours on Friday that its net profit rose 5.57% to Rs 1347.60 crore on 2.4% rise in sales to Rs 5744.40 crore in Q2 September 2009 over Q1 June 2009.
TCS has a good business pipeline and is pursuing 20 to 25 large outsourcing deals, chief executive N. Chandrasekaran said.
The aggregate net profit of 167 results announced so far rose 21.2% to Rs 7698 crore on 7.6% rise in aggregate sales to Rs 46778 in Q2 September 2009 over Q2 September 2008.
Meanwhile, inflation based on the wholesale price index (WPI) rose 0.92% in 12 months to 3 October 2009, slightly above previous week's annual rise of 0.7%, data released by the government on Thursday showed. Within the WPI, the food articles index rose 13.34%. The government revised upwards inflation for the year through 8 August 2009 to a much smaller decline of 0.37% from an estimated fall of 1.53%.
Faster industrial output growth and rising inflationary pressures have strengthened case for an end to the RBI's accommodative monetary stance next year. Industrial output grew at its fastest pace in 22 months in August at 10.4 %.
Stock and sector-specific activity may dominate trade in the coming days based on expectations on Q2 September 2009 results. Auto firms are seen reporting strong Q2 results on strong volume growth and on lower input costs. Lower interest rates and pay hike for government employees has boosted auto sales this year after last year's slowdown in demand. Government employees have started receiving the balance 60% of their wage arrears as per the recommendations of the VIth Pay Commission.
Cement firms, too, are seen reporting good Q2 numbers on the back of volume growth, higher realisation and decline in costs like imported coal. Metal firms are seen reporting fall in net profit due to a sharp fall in metal prices on year-on-year basis.
Fall in volumes in the commercial property segment and lower realisations in both commercial and residential property segments, will pull earnings of realty firms lower.
Banks are seen reporting a sedate growth in core lending amid sluggish credit offtake. On the flip side, PSU banks will benefit from treasury gains amid volatility in prices of government securities during the quarter.
Strong growth in new subscriber additions will aid topline growth of telecom firms. But falling average revenue per user (ARPU) and revenue per minute due to intense competition will cap bottom line growth.
The US stocks fell, pulling benchmark indices down from a one-year high on Friday as General Electric and Bank Of America reported disappointing results. Consumer confidence for the month of September was below economists' estimates. Dow Jiones slipped below 10,000 mark. The Dow was down 67.03 points, or 0.7%, to 9,995.91. The S&P 500 index fell 8.88 points, or 0.8%, to 1,087.68, and the Nasdaq Composite Index fell 16.49 points, or 0.8%, to 2,156.80.
Closer home, banking, realty stocks and index heavyweight Reliance Industries (RIL) led the rally on the bourses on Friday as strong response to the initial public offer of Indiabulls Power, sustained buying by foreign funds and higher global stocks boosted sentiment. The BSE 30-share Sensex rose 127.62 points or 0.74% to 17,322.82, its highest closing since 16 May 2008 on last day of Samvat 2065.
As per provisional figures on NSE, foreign funds bought shares worth Rs 576.78 crore and domestic funds bought shares worth Rs 6.99 crore on Friday.
A section of the market is concerned that a glut in share sales may suck liquidity from the secondary market. As per reports, 30 companies have filed their draft red herring prospectuses in September 2009 with market regulator Securities & Exchange Board of India (Sebi) for raising funds through initial public offering.
The corporate sector has raised large sums of money through equity and equity related instruments in the past six months or so to either to retire high cost debt or to fund expansion. The supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary market.
As per one report, companies plan to raise over Rs 50,000 crore through initial public offers (IPOs), follow-up public offers, divestment of stake sale in the second half of the current financial year. Reliance Infratel also announced on 22 September 2009, its intention to raise Rs 5,000 crore from the primary market. A number of companies are also in the fray to raise funds by way of qualified institutional placement (QIP), reports suggest.
Divestment of state-run firms by the government may also increase the supply of paper in the market. As per recent reports, the government is planning to announce a blueprint for selling its stake in state-owned firms in the first week of October 2009. The policy is expected to suggest how the government will eventually bring down its stake in public sector companies to 75% over a period of time.
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