market looks to tcs,infy results

Market looks to Q3 numbers of TCS, Infosys

MUMBAI: Earnings from Infosys Technologies, TCS, Bajaj Auto, HDFC Bank and a few others are expected to help benchmark indices shrug off the ethargy this week.

Investors are hoping October-December quarter results will give them an insight of what to expect from domestic companies in the next few quarters, though few are expected to base their investment decisions on the outcome.

“This quarter, if it delivers largely as per expectations, should suggest a return to relatively higher level of growth rates,” said Citigroup’s Aditya Narain and Tirthankar Patnaik . “Could this be the start of a significantly higher growth rate cycle - we think it’s still early days to make that call, and we don’t believe the quarter would give full enough answers either,” they said in a report.

Companies constituting the Sensex are expected to report a 15-18% growth in net profits from the same quarter last year, after four quarters of subdued growth, led by a strong sales growth of 20-25%, according to earnings estimates of five brokers. The growth will be partly due to statistical effect of a lower earnings last year, amid the downturn.

Infosys will set in motion the Q3 quarter earnings of top companies on Tuesday.

Investors will closely watch comments from the company on IT budgets of US companies, pricing scenario and outlook on rupee. Analysts remain optimistic about the sector’s prospects in the long-term.

“Any weakness in stocks during the results season would be an opportunity to buy into the IT sector,” said IDFC SSKI Securities’s Hitesh Shah. “TCS and Infosys are our key result picks,” he added in a report. BSE’s IT index has risen over 130% in the past year compared with the 80% gain in the Sensex.As IT sector is gaining its gloom & creating a good no. of vacancies.

Despite expectations of a rebound in earnings growth, market participants have reason to be sceptical about Indian equities.

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