Indian Market Report: Star Performers of this Earnings Season

Earnings season kicked off with Infosys (INFY) reporting, followed by another index heavyweight, HDFC Bank (HDB), and the markets (BSE Sensex) responding with a thumping two day gain of 3.9 %, which left the index up 1.4 % for the week.

The surprising event was that even though the stocks (HDB, INFY) that reported moved decently, they had a more pronounced effect on their peers, like Wipro (WIT) and Tata Consultancy Services, both up 4.8 % and ICICI Bank (IBN), up 6.8 %, which actually hit an upper price circuit in trading on Friday. Other star performers were MTNL (MTE), the telecom major, up 10 % and Jet Airways, up another 6.7 %,which continued its cruise upwards on the back of falling oil prices.

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WIT/INFY 1-wk comparison chart


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IBN/HDB 1-wk comparison chart

There were more contradictory moves on the monetary policy front. While the government clearly stated that current inflation figures were unacceptable and set a target of 4% for inflation, it also loosened up the spigots for more credit creation in the banking sector by reworking the SLR limits for banks (Statutory Liquidity Ratio). The government clearly recognizes the importance of the easy money policy that has helped propel the high growth in the economy and is seeking to sustain these growth rates. On the economic front, record highs were hit by the IIP (Index of Industrial Production) at 14.4 % for Nov 2006,which proved that the low October 2006 numbers were just that, an errant blip.

Global interest in the Indian economy continued to catch headlines, as Goldman, NYSE and Softbank bought into the National Stock Exchange [NSE], the country's main securities marketplace. IFCI, an institutional owners of the NSE was up 67.1 % on the news. On the telecom front, the bid for Hutch Essar telecom is heating up with all potential buyers queuing up to meet the powers that be at Delhi, to get informal approval to submit bids starting later this month.

Market participants are waiting for more earning reports to flow down the pipeline to get a better read on the corporate environment, especially to see the effect of high interest rates on earnings statements and projections going forward.

Have a good week!

Disclosure: Author hold positions in the above mentioned stocks on behalf of his clients in their investment portfolios.