Third quarter results to dictate trend

The ongoing quarterly reporting season may dictate the market trend in the near term. Investors are bracing for poor quarterly earnings as high input costs, credit crunch, high interest rates, and the burden of piled-up inventories may hit bottom lines of companies. India's largest private sector firm by market capitalisation and oil refiner Reliance Industries will unveil its Q3 December 2008 results on 22 January 2009.

The quarterly earnings season was kicked off by Infosys Technologies on a positive note with stronger-than-expected results on 13 January 2009. So far, aggregate results of 83 companies showed 19.40% rise in net profit on a 36.60% increase in net sales in Q3 December 2008 over Q3 December 2007.

Industry representatives will meet government officials on 21 January 2009 to discuss further measures to stimulate country's economy, Trade Minister Kamal Nath had said on 12 January 2009.

On 2 January 2009, the Reserve Bank of India (RBI), cut the repo rate and the reverse repo rate by 100 basis points each, with immediate effect. Repo rate is the rate at which RBI lends to commercial banks and reverse repo rate is the rate at which RBI accepts deposits from banks. After the latest cuts, the repo rate is now at 5.5% and the reverse repo is now at 4%, the lowest ever.

The RBI also announced a cut in cash reserve ratio, the proportion of deposits banks must keep with the central bank, by 50 basis points to 5% with effect from 17 January 2009. Lower interest rates may revive the domestic economy, which has been slowing faster than expected due to high interest rates and the global financial crisis.

Meanwhile, global cues turned positive after Bank of America Corporation, the largest US bank by assets, received a $138 billion emergency lifeline from the US government late on Thursday, 15 January 2009, to support its acquisition of Merrill Lynch & Company and prevent the global financial crisis from deepening.

Bank of America Corp will receive $20 billion in fresh government cash and a federal backstop against $118 billion of bad assets to help the bank absorb Merrill Lynch & Co.

Closer home, Jaiprakash Associates, Dr. Reddy's Laboratories, Hero Honda Motors, KS Oils, LIC Housing Finance, Mangalore Refinery & Petrochemicals, Mahindra Lifespace Developers, Nagarjuna Fertilisers & Chemicals, Reliance Capital, Reliance Petroleum, Tata Coffee, United Breweries, Rolta India, Religare Enterprises, United Breweries (Holdings), Wockhardt, Bank of Rajasthan, Gujarat NRE Coke, Jaypee Hotels, Reliance Industrial Infrastructure, Allahabad Bank, Apollo Tyres, BASF India, Great Offshore, Madras Aluminium Company, MindTree, Punjab Tractors, REI Agro, State Bank Of Mysore, amd State Bank of Travancore, among others will declare their December 2008 ended quarter results next week.