The importance of Q4 results

Given the continuing uncertainty in the financial markets (especially equities), the upcoming Q4 results of  India, Inc. become very important as a signal of “the India growth story”. Advance tax collections are higher and there are signs that Q4 results will be OK. However, the markets will focus on specific bellwether stocks from each industry. How TCS, Infosys and Wipro perform (and what guidance they give for Q1 of 2008-09) will be seen as a barometer of how much outsourcing is likely to be affected by the US slowdown. Some relief of course comes from the relative let up in the Rupee’s apreciation vis-a-vis the US$-but that can all change in one day. Already, there are concerns that Satyam, which did so well in Q3, may be impacted by what has happened to Bear Stearns, which was a Satyam client. HCL too is likely to be somewhat impacted. Pretty much every company in the IT services space will be impacted- including the Big 3. The question is by how much? And whether they can compensate for a slowdown in the BFSI space through growth elsewhere. And if so, to what degree the offset will happen.

Stocks like ICICI Bank will be under pressure, given their investments in derivatives that have soured. And because of the massive and unwarranted run-up in stock prices through much of 2007,  stocks like Reliance, BHEL, Bharti and Reliance Communications will find it hard-pressed to bounce back up to their early January levels.

All in all, the next month or so will be critical, as results start flowing in. Let’s hope for the best.

And they all fall down….

India capitulated meekly to some disciplined bowling by Ntini and Steyn on Day 4. Starting at 468/1, with Sehwag being in a rampaging mood, one would have been forgiven for thinking that India would take a healthy lead of 150 runs or so by tea and then ask Grame Smith and Neil McKenzie to see off the new ball in the last sessions of a day where they had to brave Chennai’s heat and humidity for most of the day.

But no such thing happened. Sehwag departed early, after being frustrated in his attempts to get the strike by some dour defending by Dravid. Granted that Dravid scored his 25th century and also became only the third test player after Gavaskar and Tendulkar to cross  10,000 runs in test cricket. However, one was left with the feeling that he was not playing for the team- something that vintage Dravid could never have been accused of doing.  Bottomline- India lost 9 wickets with an addition of only about 160 runs to their Day 3 score (playing for most of Day 4) and ended their first innings at 627- a relatively modest lead of 87 runs.

South Africa rose to the challenge and although they lost Smith, Amla and McKenzie were scoring at a pretty brisk pace, ending the day with 131/1- effectively, 44 runs ahead.

Chepauk’s reputation of being a spinner’s track on Days 4 and 5 have so far been belied, and the match seems headed for a draw, with the only excitement coming from Sehwag’s swashbuckling 319.