Markets at a glance

Better than expected earnings from Indian corporates helped BSE Sensex close at its highest level in 2009. Favourable global cues also aided key benchmark indices extend gains for the third straight week. The Sensex rose 290 points or 1.9 per cent to 15,670 in the week ended July 31, while Nifty rose 68 points or 1.5 per cent to 4,636 during the week.

The BSE Mid-Cap and the BSE Small-Cap indices outperformed Sensex with returns of 3.5 per cent and 2.6 per cent, respectively. Sustained buying to the tune of Rs 2,500 crore by foreign funds during the week also helped the momentum.

What to expect this week

With the June 2009 earnings season coming to an end, global markets could give direction to domestic bourses. An increase in global risk appetite is a positive for markets. US GDP data released on July 31 indicated that the economy contracted at a slower pace for the second quarter, which again is a positive sign.

Further buying by foreign funds, which totalled Rs 14,500 crore in the last two months, in the secondary markets could lend support. Attention is shifting to primary markets as the NHPC IPO opens this week. The progress of the monsoon could be crucial as well as early indications suggest that total rainfall since the start of June was 19 per cent below average.

 

Stock to watch
RELIANCE COMM
Last week’s close (Rs) 275.70 Prev. week’s close (Rs) 276.28 Week’s high (Rs) 294.70 Week’s low (Rs) 250.45 Last week’s ave. daily turnover (Rs cr) 326.91 Prev. week’s ave. daily turnover (Rs cr) 395.06 Number of up/down move 2/3

The Reliance Communications scrip could witness some action in Monday’s trade following its better than expected quarterly results announced after market hours on Friday.

The Street would be positively surprised with net profit growth figure that came at 8.6 per cent, well above estimates of a decline of 17 per cent. The increase in net profits is largely attributed to a boost in other income. However, revenue increase of 15.5 per cent was below analysts’ estimates.

The recent reduction in the call termination charge impacted revenue growth believe analysts. Subsequently, ARPUs saw a sequential dip from Rs 224 to Rs 210 in the June quarter. At Rs 275, the stock trades at 30 times its 12-month trailing EPS.