Indian stocks to 'track global markets'
Sunday, 5 April 2009
MUMBAI, Apr 4 (AFP): India's stocks will track global financial markets next week, led by the outcome of the G20 summit which pledged a huge raft of money to counter the global economic crisis, dealers said.
Participants in the Group of 20 summit in London overcame their differences Thursday to promise a trillion dollars in loan guarantees as well as a crackdown on tax havens and excess corporate pay.
But analysts said political uncertainty ahead of India's general elections, which start later this month, and fourth-quarter corporate earnings could cap gains.
For the week to April 2, the benchmark 30-share Sensex index rose 2.98 per cent or 300.34 points to 10,348.83, its fourth straight week of gains.
India's stock markets were closed for trading Friday due to a Hindu holiday.
Stocks were choppy throughout the week as investors locked in gains at the key psychological 10,000 mark, but rallied upwards towards the end due to firm global markets.
Analysts said, however, that fourth-quarter earnings could depress sentiment.
"We expect core earnings to decline 12 per cent in the fourth-quarter against a year earlier. This could be the second consecutive quarter of declines," said Abhishek Singhal, analyst at Edelweiss Securities.
Still, Goldman Sachs raised India's stock rating to "market weight," the first upgrade since it was rated "underweight" in January 2008.
While India's corporate profit growth "will remain under pressure in early 2009, we expect relatively better profitability and earning per share growth than in most other markets," it said in a note.
"We are raising our long-standing underweight stance on India to market weight because we believe that India's investment merits relative to other regional alternatives have improved," Goldman Sachs added.
The Sensex plunged to 7,697 on October 27, as the financial crisis bit deep last year, from a peak of 21,206 points on January 10, 2008.
Participants in the Group of 20 summit in London overcame their differences Thursday to promise a trillion dollars in loan guarantees as well as a crackdown on tax havens and excess corporate pay.
But analysts said political uncertainty ahead of India's general elections, which start later this month, and fourth-quarter corporate earnings could cap gains.
For the week to April 2, the benchmark 30-share Sensex index rose 2.98 per cent or 300.34 points to 10,348.83, its fourth straight week of gains.
India's stock markets were closed for trading Friday due to a Hindu holiday.
Stocks were choppy throughout the week as investors locked in gains at the key psychological 10,000 mark, but rallied upwards towards the end due to firm global markets.
Analysts said, however, that fourth-quarter earnings could depress sentiment.
"We expect core earnings to decline 12 per cent in the fourth-quarter against a year earlier. This could be the second consecutive quarter of declines," said Abhishek Singhal, analyst at Edelweiss Securities.
Still, Goldman Sachs raised India's stock rating to "market weight," the first upgrade since it was rated "underweight" in January 2008.
While India's corporate profit growth "will remain under pressure in early 2009, we expect relatively better profitability and earning per share growth than in most other markets," it said in a note.
"We are raising our long-standing underweight stance on India to market weight because we believe that India's investment merits relative to other regional alternatives have improved," Goldman Sachs added.
The Sensex plunged to 7,697 on October 27, as the financial crisis bit deep last year, from a peak of 21,206 points on January 10, 2008.