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WEEK AHEAD-Indian shares seen jittery, eye results

BOMBAY, April 20 (Reuters) - Indian shares are likely to be edgy this week as worries about foreign fund sales and a tepid outlook for the technology sector undermine investor sentiment in one of the world's worst-performing stockmarkets in 2003.

But upbeat earnings from old economy sectors could help contain some of the damage inflicted by surprisingly weak software results.

The Bombay index has fallen nearly 12 percent this year to 2,984.50 points, while the broad market has lost about $17 billion or 12.8 percent of its market value.

Last week, the marker dropped 0.5 percent after poor results and disappointing guidance from software bellwether Wipro , the nation's fourth most-valuable company. The index also struck a five-month low of 2,948.67 points during the week. "The foreign fund sales figures will be a source of worry and money will continue flowing out of the technology sector," said Jayesh Shroff, fund manager with BOB Mutual Fund which manages more than two billion rupees in assets.

Foreign funds have sold a net $53.6 million of Indian equities since software bellwether Infosys Technologies , India's second-biggest software exporter, warned earlier this month of a slower net profit growth this year.

Both Wipro and Infosys have benefitted from an outsourcing boom by technology companies, but have started offering discounts amid increasing competition, which are hurting margins already under pressure from a rising rupee and acquisition costs.

Analysts said the undertone would also be weak because of the monthly expiry of stock derivatives as investors with short futures positions may try to influence the cash market.

"Because trades are settled in cash, there is a massive incentive for taking short-positions in futures," said Neelesh Mehta, Vice-President Dalmia Securities, a Calcutta-based brokerage. "Volatility will be the order of the day."

OLD ECONOMY HOPES

"So far, the mayhem has been confined to the technology sector, but results from the banking, auto and petrochemicals sectors could hold the key to the market's recovery," said Sanjay Sinha, fund manager with the Unit Trust of India.

Petrochemicals giant Reliance Industries, India's second-biggest bank ICICI Bank, power utility BSES Ltd and the nation's No. 4 software exporter Satyam Computer Services -- all index components -- report their earnings this week.

Chartists also said the benchmark index was showing signs of weakness, although the validity of a key support level of 2,925 points, would be closely tracked.

DIARY

The following are the major quarterly earnings announcements this week.

April 21 - BSES Ltd

April 23 - Reliance Industries

April 24 - Satyam Computer Services

April 25 - ICICI Bank