Stock-specific action to continue; monsoon progress eyed

Stock-specific buying based on expectations of first quarter June 2010 results is likely to continue, with the results season in full swing. Investors will also closely watch the progress of the monsoon rains. Most Q1 results announced so far have been good.



HDFC Bank unveils Q1 results on Monday, 19 July 2010. On Wednesday, 21 July 2010, another private sector bank Kotak Mahindra Bank unveils first quarter results. ACC, Ambuja Cements, ITC, Idea Cellular, Punjab National Bank and Bajaj Auto will announce results on Thursday, 22 July 2010. The board of Bajaj Auto will also consider issue of bonus shares along with the first quarter results.

On Friday, 23 July 2010, Bharat Heavy Electricals, Jaiprakash Associates and Wipro will unveil first quarter results, to be followed by car major Maruti Suzuki on Saturday, 24 July 2010.

Investors are closely watching the progress of the monsoon rains. Weak monsoon rains in the past week will not significantly hurt crop output in the country and the weather outlook is encouraging, Farm Minister Sharad Pawar said on Friday, 16 July 2010. Monsoon rains were 24% below normal in the week ended 14 July 2010. Out of 36 meteorological sub-divisions, rainfall was excess in 8, normal in 4, deficient in 19 and scanty in 5 sub-divisions during the week. Bihar, east Madhya Pradesh, Chhattisgarh, Vidarbha, Andhra Pradesh, Tamil Nadu and Sub- Himalayan West Bengal & Sikkim received good rainfall during the week.

The India Meteorological Department (IMD) said the cumulative seasonal rainfall for the country as a whole during this year's monsoon up to 15 July has so far been 14% below the long period average (LPA). Out of 36 meteorological subdivisions, the rainfall has been excess over 6, normal over 16 and deficient in 14 sub-divisions. The IMD expects rainfall activity to enhance over many parts of the country from Monday, 19 July 2010.

The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The weather office expects this year's monsoon rains to be at 102% of the long-period average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.

Barring Infosys, the first quarter results announced so far have been good. TCS reported strong-than-expected numbers and the company raised its hiring target by 10,000 to 40,000 for the year ending March 2011 (FY 2011), reflecting strong demand. But, IT bellwether Infosys' results were below market expectations. Infosys official warned that the global economic environment continues to be uncertain, even though the company raised its full-year revenue and profit forecasts.