Earnings guidance key to market tempo

Corporate results are expected to provide the next impetus for the markets in the week ahead.

Though the markets ended higher amid bargain hunting and short covering in last two trading sessions last week, brokers said the next major trigger for the market could be the March quarter results.

The market is expected to trade cautiously with a positive bias during the next week on hopes of strong results, the broker added.

"The expectations from corporate performance is high, and even a slight disappointment can trigger a sell-off," cautioned a BSE broker.

The first set of big corporate results for the January-March quarter will start pouring in from the second week of April.

The result announcement and earnings guidance from technology major, Infosys Technologies, could set the tone for tech stocks. "The expectations have already started building up with some action witnessed in technology counter on Friday.

Markets expect strong quarterly results from frontline tech companies on the back of rising volumes and a steady rupee, said a sector analyst with a domestic broking firm.

On Friday, three technology stocks made were among the top five Sensex gainers. Wipro was up 6.49 per cent to Rs 671.10, Infosys Technologies was up 3.84 per cent to Rs 2252.55, while Satyam Computer ended 3.01 per cent higher to close at Rs 408.50.

Gagan Banga, national sales and marketing head, Indiabulls said, "I believe we will have a mixed kind of guidance season ahead. More than the corporate results, it will be the guidance which will be crucial.

Today, results are pre-discounted in the market - it is the guidance and the body language of the management which indicates the growth aspects of any company."

"In the current quarter, metals and infrastructure sector will do well, while the rest will be in line with expectations. Steel companies however, could surprise the street," he added.

Vikram Kotak, president, Techno group, said, "Along with corporate results, the flow of foreign funds, global oil prices and hardening interest rate (both domestic and international) will determine the broad trend in the market."

While infotech, metals and engineering will post good numbers, the results of banking, oil and auto companies are expected to be under pressure.

Foreign institutional investor inflows have slowed down in the past few trading sessions, resulting in a big correction on the Bombay Stock Exchange Sensex.

The Sensex ended 5.28 per cent lower from its lifetime intra day high of 6,954.86 touched on March 9, 2005 to Friday's close of 6605.04. The index has gained 3.5 percent (223 points) in the last two trading sessions.

The head of research with a domestic broking firm said, "The results will provide an exit route to investors keeping in mind the lower GDP growth compared with last year. Even though selective mid-cap companies are expected to post good results, one needs to be cautions because the valuation are slightly stretched and the book value ratio is higher to the price."