Global markets, next batch of Q4 results to dictate trend

The market may edge higher next week as Mayawati’s Bahujan Samaj Party (BSP) is set to emerge as the single largest party in the Utar Pradesh (UP) assembly contrary to fears of a hung assembly.

As a result, domestic bourses shrugged off the impact of weak global equities on Friday 11 May 2007, as the trend of UP polls filtered during trading hours. Data showing moderating inflation and strong industrial output in March 2007 aided the recovery on that day.

The market will take direction next week from trends in global equities. It will also take its cue from some prominent Q4 March 2007 results. The key result this weekend (Saturday, 12 May 2007)is that of State Bank of India.

Suzlon Energy and LIC Housing Finance unveil Q4 results on Monday, 14 May 2007. Bajaj Auto and Tata Steel report Q4 results on Thursday, 17 May 2007. The board of Bajaj Auto will also consider proposal to split the company into two along with results. Tata Motors and Dr Reddy’s Laboratories unveil Q4 results on Friday 18 May 2007.

Some of the other Q4 results scheduled next week are Welspun-Gujarat Stahl Rohren, Shree Cement, Sobha Developers and Voltas on Monday,14 May 2007; Sun Pharma, Havell’s India and JK Lakshmi Cement on Tuesday,15 May 2007; ICI (India), Balaji Telefilms, J B Chemicals and Pharmaceuticals on Wednesday, 16 May 2007; and Federal Bank on Friday, 17 May 2007.

US stocks underwent correction on Thursday, 10 May 2007, and Asian stocks followed suit on Friday, 11 May 2007, as disappointing US retail sales and a widening US trade deficit renewed worries about the economic outlook for the world’s biggest economy. In recent days, a spate of merger and acquisition activity as well as increasingly eye-popping takeover bids have helped propel many global indices to record highs. However, the sharp and swift surge has raised concerns of a steep correction.

A strong rebound on the domestic bourses had materialized, last month as the initial Q4 March 2007 results were strong and Infosys issued a strong guidance for FY 2008 on 13 April 2007. From 12,455.37 on 2 April 2007, the Sensex had surged 1,773.51 points (14.2%) to 14,228.88 on 26 April 2007. It has since turned volatile.

India’s long-term growth prospects remain strong. The long-term growth drivers are a favourable demography (large share of young population), robust domestic consumption and acceleration in infrastructure creation.