Sensex weak ahead of earnings season

Friday was a day of range-bound movements on Indian bourses. The market finally ended almost flat after alternating between positive and negative territory. Positive cues from the US markets were ignored amid the cautious mood ahead of the quarterly earnings season.

The 30-share BSE Sensex lost 16.60 points to finish at 12,372.81. Nifty, the broader 50-share index of NSE, closed up 4.8 points at 3569.70. This marks the first weekly loss for Sensex and Nifty after 10 weeks of gains.

Elsewhere in Asia also, the stocks ended a little down on Friday. Japan's benchmark Nikkei 225 dipped 13.27 points to 16,436.06, while Hong Kong’s Hang Seng was down 4.28 points to 17,903.39. On a weekly basis, Nikkei has gained 1.9 percent this week after business confidence unexpectedly rose to a two-year high. Hang Seng is very close to the psychologically important level of 18,000 and may face some resistance going ahead.

In India, Sensex is within a kissing distance of its all-time high reached in May this year. A sharp fall had been witnessed in May in line with global trends and other emerging markets, triggered by the meltdown in the metals market and worries of rising US interest rates. Now the overall market sentiment is positive, as the economy continues to post robust growth.

With the earnings season for Q2 2006-07 kicking off next week, there is a certain amount of caution, as the expectations have been very high. The tone for the season will be set by the bellwether Infosys and other biggies in the IT pack. Besides IT, other key sectors whose results will be keenly watched are banking, automobile and FMCG. Any disappointments here will affect the sentiments and the market direction. Numbers from metals and sugar sectors will be watched for confirmation of the views on slackening momentum.