Sharekhan Weekly Report: Q3 earnings spell falls flat

Q3 earnings and strong index of industrial production (IIP) readings failed to enthuse investors and the Sensex ended the week mere 0.1% high, though continuing its gaining streak into fourth week straight. Volatility continued with the Sensex swinging 500 points during the week with a weekly high of 17776 and a low of 17276, before closing the week at 17554. Nifty closed at 5252, seven points lower than its previous week closing.

Infosys Technology’s Q3 earnings and outlook prepared the pitch for information technology stocks and the sector index, BSE IT, gained 9% over the week. BSE TECk, the second best performer of the week, advanced 6.74%. With odds of policy intervention by the Reserve Bank of India increasing with all talks of taming the run-away inflation and on improved industrial outlook, the BSE Bankex fell the most—by 2.27%, followed by BSE FMCG that shed 1.81% in the week.

We expect the market to remain volatile ahead of the third quarterly monetary policy 2009-10 review by the RBI on January 29, 2010. And the trend in the coming week will be set, to a good extent, by earnings results of India’s third-largest software exporter Wipro and India’s biggest company by market capitilisation Reliance Industries.