All eyes are on the Q2 results. Almost everyone is expecting the second quarter (July-Sep) figures this fiscal to further trigger the bullish Sensex. Even Union finance minister P. Chidambaram said recently that the quarterly corporate performance is expected to be good and, hence, the stockmarket would continue to boom. The initial announcements by firms like Infosys and
TCS last week seemed to be in sync with such expectations. Both the tech majors posted topline and bottomline growths that were way above the analysts’ estimates. Investors are now eagerly awaiting other firms to announce their results over the next few weeks.
So, does that mean that the Sensex is in for another upwardly spin and will cross the 10,000-point mark?
Not really. In fact, one’s not too sure. The reason: analysts contend that the Q2 figures have already been factored in in the current valuations. And the existing stock prices reflect what institutional investors are forecasting for the quarters in the next fiscal (2006-07). It’s only the small investors who are focused on the immediate results. Explains Jayprakash Sinha, associate VP (research), Kotak Securities: "We are categorically saying that the current valuations are stretched, and these (Q2) numbers have been taken into account in the existing prices. Therefore, despite the (initial) good results, there’s been no great movement in market response. Hence, this quarter results will not improve market sentiments."
Most of the big investors are looking at what the companies will do in Q3 and Q4 this fiscal. Many are even worried about the next year. One, the US economy is expected to post a slower growth in the near future—and that is likely to impact the prospects of all the emerging economies, including India. In addition, a recent Crisil report suggests that "going forward,...