Equity market is likely stay calm this week ahead of corporate earnings, which will start pouring in from the weekend. Infosys Technologies would be the first large-cap firm to declare its Q3 financial performance on Friday.

Though profit-taking is not ruled out ahead of pre-Budget rally, the market is in punishing mood for those who are betting on the down side, as the exuberance is so high.

The New Year started with a bang as the BSE Sensex and the NSE’s Nifty sustained the bull run and touched their highest levels in almost two years on the back of continuous foreign funds in flow following the US budget deal.

So far, global and domestic cues were positive with FIIs pumping in Rs 5,685.01 crore during the week, including provisional data of January 4.

“Historical analysis shows that $10 billion in FII inflow in Calendar Year 2013 is not unreasonable to expect and is the minimum requirement for the market to deliver positive returns," said CLSA in its India Market Strategy 2013 report.

Religare Enterprises expects the trend to continue in 2013, even as a below-par growth trajectory (FY14E growth at 5.8 per cent) limits a wholesale re-rating.

“Factors that could work against a macro revival include below-potential growth, China-led commodity inflation, further currency pain and populist reforms. We believe reformist policy would be the single most important driver of markets this year,” cautioned Religare, which forecast a BSE Sensex target of 22,500 for 2013.

Analysts are not betting big on Infosys Technologies. “We expect the EBITDA margin of Infosys to decline by 97 bps QoQ to 28.1 per cent, because of moderate wage hike of 6 per cent to the offshore employee base and 2-3 per cent to the onsite employee base,” said Angel Broking in its Q3 preview.

However, S. Gopalakrishnan, Executive co-Chairman of Infosys, recently said 2013 will be a better year than 2012. He said the global economy has improved specially in the US... China is growing faster. India has also started improving. “What is good for the global economy is good for the IT sector. So I hope the IT industry will have a better 2013.”

Infosys’ near-term organic revenue outlook has weakened over the past month due to higher-than-usual December ‘furloughs’ this year and client ramp-downs. “We believe that the street expects FY-13 revenue guidance to be cut. The extent of guidance cut, or the absence of such a cut, can be a key stock price driver,” said Credit Suisse.

Apart from Infosys, a host of companies such as Baja Corp, IndusInd Bank, CMC will also declare their December quarter financial performance on January 9.

>badrinarayanan.ks@thehindu.co.in

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