The earnings season has kicked off in right earnest with good results being posted by IT major Infosys. The company surprised the markets with good margins and maintenance of dollar revenue guidance. Markets which were stung on Tuesday with a 3 per cent loss in the benchmark indices recovered lost ground and on Friday rallied on account of the Infosys results.
The Sensex and the Nifty have rallied sharply in the last one year and it is now increasingly becoming difficult to make stupendous returns.
Dealers advise some caution as most of the good has already been factored in and the potential of a fall cannot altogether be ruled out. Most of the earnings that are likely to come in from corporates are not exactly going to be robust.
The only positive that one can see is the possibility of an interest rate cut. However, if things in Europe go from bad to worse the possibility of the Reserve Bank of India cutting interest rates is ruled out.
Investor are advised caution and buy only on dips. After all, it is important to remember that markets have already rallied sharply in the last one year.