Infosys guidance to dictate trend

The key event to watch out for in the coming week is the IT bellwether Infosys Technologies' Q4 March 2008 earnings on 15 April 2008. A depreciation of the rupee against the dollar is likely to drive good results from the IT sector on a sequential basis in Q4 March 2008 over Q3 December 2007, though the focus here is on guidance for the year ending March 2009.

Volumes may take a hit in the forthcoming week due to holidays. The market remains closed on Monday, 14 April 2008 on account of Dr. Babasaheb Ambedkar Jayanti and on Friday, 18 April 2008 on account of Mahavir Jayanti.

Q4 March 2008 results of India Inc. will dictate the near term trend on the bourses. Analysts will be closely watching what the company managements have to say about the outlook for the year ending March 2009 (FY 2009). Analysts will also scrutinize disclosures that companies may make regarding foreign exchange derivatives products that they have bought on the advice of their bankers. A steep decline in the value of the US dollar against the Japanese Yen and the Swiss Franc hit Indian corporates which have used these two currencies (Yen and Franc) extensively to swap their rupee denominated debt.

Morgan Stanley expects 23% growth in net earnings of 104 out of 108 firms in its Indian coverage universe in Q4 March 2008 over Q4 March 2007.

Prospects of further outflow by foreign funds to offset losses incurred by them in the US sub-prime mortgage market continue to weight on the market sentiment. In the calendar year so far, FIIs sold shares worth a net Rs 11455.60 crore (till 9 April 2008), to offset their huge losses in the US sub-prime mortgage market. Mutual funds were net sellers to the tune of Rs 379.80 crore in the month of April 2008 (till 9 April 2008).

The wholesale price index rose 7.41% in 12 months to 29 March 2008, accelerating from the previous week's annual rise of 7%, government data showed on Friday, 11 April 2008, sparking concerns that the Reserve Bank of India may tighten monetary policy. The rate is the highest reading since 13 November 2004 when it was 7.68%. The annual inflation rate was 5.94% during the corresponding week of the previous year.

India's industrial output (IIP) rose 8.6% in February 2008 from a year earlier, rising from the previous month's upwardly revised 5.8% growth, data showed on Friday, 11 April 2008