Mahesh Nayak
Ahead of the year-end, the market may also see some profit-taking. The Bombay Stock Exchange's benchmark Sensex has gained 8.5 per cent this year until December 20. But, it has surged 21 per cent in the past four months after touching a low of 17,448.71 on August 28.
The Sensex also touched an all-time high of 21,483.73 on December 9.
Meanwhile, on Friday, a buying spree backed by foreign institutional investors (FIIs) helped the Sensex to end the week on a positive note. The Sensex gained 371 points on Friday to end the week with a gain of 364 points.
The buying came as the market took the US Federal Reserve's tapering decision in its stride. The reduction of $10 billion in the Fed's monthly bond purchases had been factored in by the market as the tapering was expected for some time. In fact, the reduction has come as a sweet surprise, as markets the world over had been expecting a steeper cutback. Some had estimated the Fed would cut bond purchases by $20-30 billion per month.
The Reserve Bank of India's decision on December 18 to keep interest rates unchanged also boosted sentiment. There is confidence that the Indian rupee has stabilised at current levels and even an external event like the Fed's tapering would not have any major impact on it.
Sentiment was high also because Finance Minister P. Chidambaram said on December 19 that the government was better prepared than in May to deal with the consequences of the US tapering.
The next major trigger for the market will be corporate earnings for the December quarter. Next week onward the market will keep a close eye on the performance of India Inc.
The advance tax numbers gives a good estimate to what is expected in terms of revenue growth. For the third quarter of 2013/14, the advance tax payment by top 100 Mumbai-based companies registered a moderate growth of 8 per cent to Rs 21,630 crore from Rs 20,094 crore a year earlier. For the first three quarters of 2013/14, the advance tax payment by these companies was up 10 per cent at Rs 54,449 crore versus Rs 49,587 crore.
The contribution of top Mumbai companies is of significance as they account for 30 per cent of the overall annual corporate tax collection. Though the advance tax numbers give a sense of slowdown getting more accentuated, a muted corporate performance will be negative for the market and any positives and greater visibility on growth will see a re-rating in the market.
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