Results, global cues to drive equities markets….reports Rohit Vaid on Market Outlook
Third-quarter results, coupled with global macro-economic trends and commodity prices, are set to steer the Indian equity markets in the upcoming week.
“We expect Q3 (third quarter) earnings to provide direction to the markets in the coming days as investors keenly monitor management commentaries for further cues on growth,” Vaibhav Agarwal, vice president and research head at Angel Broking, told IANS.
Gaurav Jain, director with Hem Securities, elaborated that quarterly earnings of index heavyweights like Kotak Bank, Wipro, HCL Technologies and Reliance Industries will dictate the trend on the indices.
The week will see the unveiling of quarterly earnings of firms like Rallis, Kotak Mahindra Bank, Asian Paints, HCL Tech, Hindustan Zinc, UltraTech Cement, Axis Bank and Exide Industries.
“The Q3 earnings season is an important event for the Indian markets and specific stocks. The other important thing to look out for is how the consumer demand trend is seen in the results of relevant companies,” Pankaj Sharma, head of equities for Equirus Securities, told IANS.
Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, pointed out that comments surrounding Prime Minister Narendra Modi’s “Start-up India Stand up India” initiative would be keenly followed by investors.
“The Q3 numbers that have started to pour in and the Federal Reserve’s rate setting meeting scheduled for January 27-28 are likely to be the major trend setters,” James cited.
Moreover, the rupee’s trajectory and the activity of foreign portfolio investors (FPIs) would have a direct bearing on the indices.
“Meanwhile, Indian rupee’s weakness past 67 to the dollar will be a sore point, affecting sentiments, with FPIs having been net sellers almost all through last week in equities,” James noted.
On a weekly basis, the rupee weakened by 96 paise to 67.60 (January 15) to a US dollar from its previous close of 66.64 (January 8).
The National Securities Depository Limited (NSDL) figures showed that the FPIs were net sellers during the week ended January 15, 2016. They divested Rs.3,458.33 crore or $368.3 million in the equity and debt markets during January 11-15.
Similarly, the data with stock exchanges showed that the FPIs sold stocks worth Rs.4,281.89 crore in the week under review.
Volatility of global markets, especially given the crude oil plunge, China’s economic woes and fears of another US rate hike will be mirrored in the Indian markets, market observers explained.
“The market sentiments will be completely driven by the global sentiments given the volatile moves on Chinese markets, fall in crude prices and mixed data in the US,” predicted Devendra Nevgi, chief executive of ZyFin Advisors.
Besides, the week ahead will be heavily influenced by global macro-economic data from China, the UK and the US.
The US is expected to release its consumer price index (CPI), while China comes out with its index of industrial production (IIP) and GDP (gross domestic product) and the UK discloses the monthly inflation and jobless data.
“We have a slew of macro data coming out early next week which can shape global cues such as the housing starts, building permits and CPI data from the US, Chinese IIP and GDP data, and inflation and jobless claims data from the UK,” Agarwal added.
In addition, a major trigger in the form of further crude oil price slide is expected from Monday, as sanctions on Iran would be lifted. This can erode investors’ confidence – leading to a panic sell-off in equity and debt markets.
The slump across commodity prices – and the Chinese economy – coupled with disappointing domestic macro-economic data had plunged Indian equity markets during the week ended January 15.
Both the bellwether indices of the Indian equity markets closed the week at a new 15-month low.
The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange (BSE), declined by 479.29 points or 1.92 percent to 24,455.04 points from its previous weekly close at 24,934.33 points.
Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) declined during the week under review. It ended lower by 163.55 points or 2.15 percent to 7,437.80 points.
During the week under review, both the bellwether indices fell in four out of five trading sessions. This receded the barometer index to a new 52-week low– three times in the weekly trade just concluded.