The ongoing quarterly results season, coupled with the direction of foreign fund flows and global trends are expected to guide the Indian equity markets during the upcoming week.
“Firm close on Friday gives hopes that the recovery of Indian stocks will continue into the next week, but broad-based moves shall wait until more Q2 numbers pour in,” Anand James, Chief Market Strategist at Geojit BNP Paribas Financial Services, told IANS.
The second quarter results season started on October 7. Last week IT majors such as Tata Consultancy Services (TCS) and Infosys announced their Q2 results. However, the lower earnings’ guidance from the two IT majors had dampened investors’ sentiments.
Major firms like Reliance Industries, Wipro, UltraTech Cement, ACC and Cairn India are expected to come out with their Q2 results during the coming week.
“In absence of any major trigger, Q2FY17 corporate earning of top blue-chip companies will dictate the market trend in the coming week,” said Vijay Singhania, Founder-Director of Trade Smart Online.
Apart from the quarterly results, the minutes of the first Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) will be a major theme for the upcoming week.
“RBI minutes should throw insight into what transpired in the first rate setting meeting of the new governor, and could shape rate further cut expectations especially in the light of CPI (Consumer Price Index) hovering near the 4 per cent mark,” James said.
On October 4, 2016, the MPC reduced a key lending rate by 25 basis points, bringing in much relief to commercial banks and India Inc.
All six members of the panel, chaired by RBI Governor Urjit Patel, voted in favour of the monetary policy decisions — the minutes of which will be released on October 18.
On the global front, European Central Bank’s and Bank of Japan’s rate setting meetings will set the trend for foreign fund inflows into India.
Last week’s trade saw a massive outflow of foreign funds which led to the key indices to tumble by more than 1.30 per cent each.
“Investors will closely follow the pace of FIIs fund inflows into the Indian equity markets and key indices’ strength to recover from lower levels,” Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.
The Foreign Portfolio Investors (FPIs) during the week ended October 14 were drawn away from India-based equity markets on the back of heightened chances of a US rate hike in December.
In terms of investments, provisional figures from the stock exchanges showed that the week witnessed a massive outflow of Rs 2,405.21 crore in foreign funds.
Figures from the National Securities Depository (NSDL) disclosed that FPIs were net sellers of equities worth Rs 1,265.1 crore, or $189.54 million from October 10-14.
According to Desai, the equity markets are likely to experience volatile trade due to short covering at lower levels in the coming sessions.
“Auto and oil-gas stocks are likely to witness healthy buying support next week on strong fundamentals,” Desai added.
For the week ended October 14, heightened chances of a US rate hike and disappointing factory output data, plunged the Indian equity markets.
Besides, lower earnings’ guidance from IT majors, massive outflows of foreign funds and renewed fears of an early exit of Britain from the European Union (Brexit), too, dragged the key indices to end lower.
On a weekly basis, the barometer 30-scrip sensitive index (Sensex) of the BSE receded by 387.54 points or 1.38 per cent to 27,673.60 points.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) edged lower by 114.2 points or 1.31 per cent to 8,583.40 points.