Stock Market faces ‘on the cliff’ moment; earning seasons may guide direction
By S Jha
New Delhi, July 13: Nifty lost almost 140 points after touching the summit at 19562 during the day on Thursday. Sensex also slid from the level of 66,000. The day’s action was marked by sideways swings before the indices tanked from the day’s highs.
TCS began the earning seasons on a strong note to send the indices soaring in the morning session. Later Wipro too came with its result after the market hour. While the street is not expecting IT firms to surprise them by factoring in the earning compressions on account of the economic slowdown in the US and Europe, TCS surprised on the positive side, which was rewarded by the market as the scrip gained strongly.
The positive cues from the IT firms so far appear to be the decline in the attrition rate even while the hiring remains subdued. The expectation that the IT hiring may pick up sent Naukri.com owned by Info Edge on a strong note on Thursday.
However, the financials dragged the markets once more amid reports of the retail inflation climbing on account of the rising food prices. Vegetables remain firm on process, while rice has also become dearer. The consensus opinion among the economists converge on the retail inflation staying firm in the next few months, which may douse any hope of the rate cut by the Reserve Bank of India.
The PSU banks were sold heavily. Punjab National Bank fell almost six per cent from the day’s peak. The sentiment rubbed against other PSU banks, which also fell on Thursday.
The indices also slid on account of the heavyweight Reliance Industries coming under the selling pressure after the scrip retraced from the high of Rs 2800 level. The markets were initially supported by the strong gains in the HDFC Bank, with Thursday being the cut-off date for the merger arrangements with HDFC.
From the telecom space, Tejas Networks made strong gains on Thursday, netting a gain of over 11 per cent. The scrip, which has strong order book, had in its earlier stage Bharat Sanchar Nigam Limited as the main source of revenue. The government is working out the revamp of the BSNL and TCS-led consortium is part of the revival project.
Tanla, a mobile phone-solution, also gained strongly on Thursday. The scrip was the star of the last year before it lost much sheen in the last 12 months. Trigyn Technology finally appears to have come out of a long consolidation, gaining 20 per cent on Thursday. The scrip had been struggling to break the level of Rs 110 in the past.
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