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K.S. BADRI NARAYANAN

Infosys Technologies to announce results on April 13

The market is at a crucial stage and awaits signal from corporates to make a directional call. India Inc is set to announce quarterly and full-year financial performances starting next week with index bellwether Infosys Technologies to be the first among heavyweights to announce its full-year earnings on April 13. More than its performance, all eyes and ears are on its future guidance pronouncements, particularly in the backdrop of the appreciating rupee.

But the global cues seem to be somewhat soothing. Weakening crude prices — following the release of the British Navy personnel by Iran — and positive US jobs data bode well for the markets across the globe. The strong US data also allayed fear that the difficulties in the sub-prime mortgage sector might spill over the broader economy or lead to a tightening of overall credit in the US. Metal prices are also ruling firm on the LME and that is good news for metal stocks across the world.

Rate hike fear

However, expectations of further rate tightening by the RBI could subdue the sentiment. Inflation last week fell to 6.39 per cent against the previous week levels of 6.46 per cent, but still higher than the RBI's comfort level of 5-5.5 per cent. The BSE Sensex posted its worst fall for the year last Monday, plunging 616.73 points or 4.71 per cent on rate concerns after RBI quite surprisingly, during the previous weekend, raised a key short-term lending rate by a quarter percentage point to 7.75 per cent to curb inflation. The Sensex, however, recovered 3.2 per cent on short covering and due to some value buying to end the week at 12,856 against the previous week close of 13,072.

A host of public sector banks, which were awaiting signal from State Bank of India, are expected to hike interest rates. On Saturday, SBI hiked prime lending rate by 0.5 percentage point. Private sector banks such as ICICI Bank and HDFC Bank, however, been quick to respond to RBI's move with many jacking up their rates almost immediately. Meanwhile, the RBI will decide the full-year Monetary Policy on April 24, on which, apart from bankers, equity market participants are also keen on. Any further raise could spell doom for the stock markets as that could impact economic growth and corporate earnings adversely.

China to dampen spirit?

Signals from China are not all that encouraging.

In a move to further control liquidity and curb lending, the Chinese central bank said it would raise the amount that lenders must hold in reserve for the sixth time in 10 months time since last June.

The reserve requirement ratio will rise by 0.5 percentage point to 10.5 per cent from April 16 as the nation's economic growth shows no sign of moderating after the previous five increases, the People's Bank of China said.

This may dampen sentiment globally.

Of late, foreign institutional participation in the domestic markets is also somewhat muted.

Apart from Infosys, IT companies such as iGate Global, CMC and Mastek are also set to announce their results.

IOSCO conference

Meanwhile, market regulators across the world are meeting for a global conference in Mumbai this week.

The International Organisation of Securities Commissions (IOSCO), which oversees over 90 per cent of world securities markets, is expected to discuss among other things role of hedge funds and regulating them and implications of the consolidation of stock exchanges worldwide.

This is the first time that India is hosting the IOSCO conference.

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