Post Market Commentary – 08-April-08

Sensex sheds 169 points as L&T tumbles

The market lost ground today giving up yesterday's gains tracking weakness in Asian and European stocks. Larsen & Toubro and Wipro were major losers from the Sensex pack. Bharat Heavy Electricals and Bharti Airtel were major gainers from Sensex pack. Reliance Energy recovered from lower level.

BSE Sensex ended down 169.46 points or 1.08% at 15,587.62

S&P CNX Nifty was down 51.55 points or 1.08% at 4,709.65.

Larsen & Toubro lost 5.09% to Rs 2,581.30 even as company said it had bagged four orders worth Rs 1687 crore. The orders are for water supply projects, sinter plant and cold roll mill and a coal handling plant.

Bharat Heavy Electricals rose 4.67% to Rs 1,712.75.

US stocks were little changed on Monday, 7 April 2008, as rising oil prices stoked fears that corporate profits will suffer, overshadowing optimism the credit crisis is easing on news that Washington Mutual Inc was close to securing a $5 billion investment.

The next major trigger for the market is Q4 March 2008 results of India Inc. Analysts will be closely watching what the company managements have to say about the outlook for the year ending March 2009 (FY 2009). Analysts will also scrutinize disclosures that companies may make regarding foreign exchange derivatives products that they have bought on the advice of their bankers. A steep decline in the value of the US dollar against the Japanese Yen and the Swiss Franc hit Indian corporates which have used these two currencies (Yen and Franc) extensively to swap their rupee denominated debt.

As regards Q4 March 2008 results, Morgan Stanley expects 23% growth in net earnings of 104 out of 108 firms in its Indian coverage universe in Q4 March 2008 over Q4 March 2007.

Good results are expected from the telecom sector on the back of strong growth in new subscribers additions. Infrastructure and engineering firms, too, are seen reporting decent numbers in Q4 March 2008 on the back of healthy order book positions. The performance of auto firms is likely to be sluggish due to muted volume growth and rise in input costs.

A depreciation of the rupee against the dollar is likely to drive good results from the IT sector on a sequential basis in Q4 March 2008 over Q3 December 2007, though the focus here is on guidance for the year ending March 2009 from IT bellwether Infosys Technologies. Infosys guidance will give investors a sense of the effect of the weakening US economy on technology spending by companies there.