Earning season key cue for mkts now: Experts

Dipan Mehta, Member BSE & NSE said the key cues going forward for possibly the first half of next year has to be clearly earnings. Rajat Bose, rajatkbose.com feels that 3,000 would be crossed this month and markets would actually move up even higher.
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Dec 12, 2008, 09.18 AM | Source: CNBC-TV18

Earning season key cue for mkts now: Experts

Dipan Mehta, Member BSE & NSE said the key cues going forward for possibly the first half of next year has to be clearly earnings. Rajat Bose, rajatkbose.com feels that 3,000 would be crossed this month and markets would actually move up even higher.

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Earning season key cue for mkts now: Experts

Dipan Mehta, Member BSE & NSE said the key cues going forward for possibly the first half of next year has to be clearly earnings. Rajat Bose, rajatkbose.com feels that 3,000 would be crossed this month and markets would actually move up even higher.

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Dipan Mehta,Nipun Mehta,Rajat Bose, Member BSE & NSE

After yesterday's stellar rally the markets settled into consolidation mode today. The indices traded in a range throughout the session. Nifty closed at 2,920 down 8 points, while Sensex shut shop at 9,645 down 9 points.

 

Dipan Mehta, Member BSE & NSE believes that the current bear market rally is slightly different as compared to some of the earlier bear market rallies which we have seen. This relief rally or bear market rally may have some strength, some way forward and maybe this is just a one off session where some profit booking is taking place and you could see a resumption of this particular pullback pretty soon maybe tomorrow’s trading session or next week as well, he added.

 

According to Dipan Mehta, the key cues going forward for possibly the first half of next year has to be clearly earnings and there is a lot of trepidation in the market as to what the earnings would be for this quarter. He sees a volatile January especially in the latter half of January when bulk of the results will come out and there will be some more clarity on how FY09 is going to be.

 

Nipun Mehta, Executive Director & Head - Private Banking, SG Private Banking India feel there is concern on the kind of confidence levels that needs to be coming in the market, which to a degree with some of the bad news easing appears to be gradually creeping in. “This initial phase itself shows a degree of FII flows coming in, which is likely to lend that degree of stability and confidence to the market. Markets are not likely to have a bottom, which is significantly lower than current levels or even from levels which one had seen over the last two or three months. So, a small degree of turnaround in terms of confidence and the flow is likely to continue till you start having earnings season actually coming in and showing up numbers, as you go into January.”

 

Rajat Bose, rajatkbose.com feels that 3,000 would be crossed this month and markets would actually move up even higher. Since the markets have tested 2860 or 2861 today, the course correction is already through and he continues to remain bullish. “Only about 4 lakh Nifty shares have been liquidated from its intraday open interest high. So this suggests that bulls are very much committed to taking the market on the upside and they have put their money in. So I would still remain bullish and I expect 3,000 to be crossed shortly.”

 

Where are the markets headed?

Dipan Mehta sees some more strength in the current relief rally which is underway. “There maybe a succession of news flows till next year. A lot of the negatives are getting gradually priced in as we see around us almost nobody is in denial anymore and the general consensus is that global economy is slowing and governments, companies and consumers need to do their bit to stay afloat and to try and boost the economy, provide stimulus packages.”

 

Dipan Mehta expects a lot of action underway at every level be it government, corporate or consumer and that’s going to have its effect over the next few weeks or so. “This market could easily go to around 3,000 and then depending upon the kind of volumes and the FII participation and corporate news flow it could go at 3,200 on the Nifty as well.”

 

Road ahead for IT companies:

Dipan Mehta feels that it is quite likely that a lot of IT companies will face challenges going ahead. He also sees a lot of negative news flow whether in the form of results or in the form of a lower guidance coming through in the December quarter results when the management makes the announcement. There is a strong likelihood that there could be volume decreases in this quarter itself and even for the March quarter and June thereafter one would see flat to lower volumes, he added.

 

Impact of IIP numbers on capital goods stocks:

Dipan Mehta believes that IIP numbers at the end of the day don’t have as much of an effect. “Those numbers are a bit of a suspect and there is always the feeling that there are some inaccuracies and is not a correct reflection of what exactly has happened in the economy.”

 

According to Dipan Mehta, capital goods manufacturers are more concerned with the kind of fiscal stimulus package, interest rates, how many projects are going in for financial closure.

   

Will realty see a transition?

Nipun Mehta believes it will still take some time for a lot of real estate companies for their business models to change completely. “Some of them are clearly changing their business models. The liquidity crunch that they continue to face is something that each company is addressing in a different manner. So, it is not that the entire industry is benefiting out of the liquidation of some of the assets that you keep seeing by some of these companies where either an existing asset is sold or large tracts of land are sold or there are alternative group company businesses that are getting sold.”

 

According to him, the kind of liquidity crunch that one has seen across the industry is not something that is going to turn around very quickly merely because of a change in business model. Individual companies would benefit because of these kinds of individual steps that they would take, he added.

  

Disclosure

Dipan Mehta: It is safe to assume that my clients & I may have an investment interest in the stocks/sectors discussed.

 

Nipun Mehta: It is safe to assume that my clients & I may have an investment interest in the stocks/sectors discussed.

 

Rajat Bose: It is safe to assume that my clients & I may have an investment interest in the stocks/sectors discussed.

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