Infosys' guidance holds the key

Dalal Street is likely to open on a positive note this week following improvement in global cues, while IT major Infosys’ guidance announcement for FY10 may bring in some consolidation in the market, analysts say.

Marketmen said the quarterly earnings figures and the revenue guidance of IT bellwether Infosys would determine the direction of the market in the second half of this week, which has gained substantially in the past five weeks.

“Uptrend will continue in the domestic market only if the Infosys guidance is positive. If the Infosys FY10 guidance is below Street expectations, it would provide the market with a reason to go for a sideways consolidation,” Kejriwal Research and Investment Services Head Arun Kejriwal said.

Echoing similar views, brokerage firm Bonanza Portfolio's Assistant Vice President Avinash Gupta said, “Market is likely to remain on a strong growth path this week on positive global cues, while Infosys’ quarterly results and guidance may hold the key for market movement.”

The main event on the domestic front would be the beginning of the corporate earnings season this week, with IT major Infosys Technologies announcing its earnings figures on Wednesday.

“A spate of positive developments have made the market move one-side up for the past five weeks. This week, the bulls might sit back and take rest and consolidate their gains,” SMC Global Vice President Rajesh Jain said.

The BSE Sensex gained over 455 points in the past week and closed at 10,803.86 points on Thursday, while the NSE's Nifty index ended with a gain of 131 points at 3,342.05.

Analysts said the market would track the movements in the global markets cautiously, as the earnings of US financial sector would be assessed by the earnings figures to be reported by the three big banks — Goldman Sachs, JP Morgan and Citigroup — this week.

“Worldwide, the banking stocks have been on a downslide. Earnings figures of the big banks would provide cues for the performance of domestic financial institutions,” Jain said.

On Friday, the US market ended in the positive zone with the Dow Jones Industrial Average surging 246 points to 8,083.38 and the Standard & Poor's 500 Index gaining four per cent to 856.56 points.

US financial stocks went up on last Thursday on anticipation of the earnings figures of these three big-wigs. Their results would determine the next move of the global banking sector, he added.

Foreign Institutional Investors have invested over Rs 827 crore last week in equities, while so far in April, they have been net investors to the tune of Rs 1,056.10.

“Domestic markets are coming out of the bearish cycle and are discounting all negative news. Investors are not hoping anything big from Infosys. FIIs are buying heavily at this level and this is keeping the momentum going,” Jain said.