The kitty swells

Mumbai, Jan. 4: With the sensex breaching the 6000-mark, the attention of the market is now shifting to corporate results for the third quarter that will pour in from this week.

The result season assumes significance as much of the recent buying on the bourses was spurred by the expectation that India Inc’s third quarter performance will be robust on the back of strong economic fundamentals.

While the technology sector, led by software services major Infosys, is expected to kick off the result season later this week, market watchers said attention would gradually shift to the performance of old economy sectors, including steel, aluminium, automobiles, refinery and banking.

Though brokers admit that the markets have pinned up hopes on a healthy report card for the third quarter, the widespread mood is that corporate India is unlikely to disappoint.

Analysts said with the world economy showing signs of improvement, technology companies are likely to post positive numbers and even dole out an encouraging guidance.

“Stability in billing rates, better volume growth coupled with the success of outsourcing should see domestic software service companies reporting good numbers,” an analyst from a local brokerage said.

He added that even most of the commodity companies are set to report encouraging numbers on account of a firm trend in product prices and improvement in domestic demand.

“The FMCG companies could report better growth numbers than the preceding quarters,” he said.

The healthy performance projected from corporate India is expected to result in increased buying by not only existing foreign institutional investors (FIIs), but also see the entry of new funds into the country.

Notwithstanding the sharp appreciation in equity values recently, brokers feel that a robust economic growth rate of around 6-7 per cent and the valuation opportunities compared with other markets should see overseas investors continuing their interest in India.

“It is a question of pure economic growth. There are very few countries that are talking of a growth rate of 6-7 per cent. Therefore the Indian equity markets still have a potential,” a broker said.