Q4 results, macro-data to guide equity markets’ movements

Mumbai: Upcoming fourth quarter earning results, along with macro-economic data points and global geo-political tensions are expected to determine the trajectory of Indian equities markets during the week starting April 10.

“Markets next week would focus on the upcoming earnings season,” Devendra Nevgi, Chief Executive of Zyfin Advisors, told IANS.

“Since markets have moved up in recent weeks driven by FPI (foreign portfolio investors) flows and PE (price-to-earning) ratio expansion, the earnings growth support is needed for the markets to sustain the uptrend.”

IT major Infosys is expected to be the first blue chip firm to come out with its Q4 results on April 13.

Apart from the Q4 results, investors will also be looking forward to the upcoming macro-economic data points such the Index of Industrial Production (IIP) figures.

India’s Central Statistics Office (CSO) will release the macro-economic data points — IIP and Consumer Price Index (CPI) — during the upcoming week.

The CPI data will be followed by the release of Wholesale Price Index (WPI) by the Ministry of Commerce and Industry.

“Investors will closely follow the domestic economic data like CPI and IIP, while price movement of Indian rupee against USD will be the crucial factor for market sentiments next week,” pointed out Dhruv Desai, Director and Chief Operating Officer of Tradebulls.

Last week, the Indian rupee appreciated by 56 paise to 64.29 against a US dollar from last week’s close of 64.85 to a greenback.

It is expected that the continuing appreciation in Indian rupee will hurt India’s export competitiveness and USD earnings of corporates in the IT sector.

Besides, investors would be cautious about crude oil price movement, especially after the US’ cruise missile attack against the Bashar Hafez al-Assad’s regime in Syria.

“Markets may review the developments in Syria and then it may start focusing on the March quarter earnings,” said Deepak Jasani, Head – Retail Research, HDFC Securities.

On technical levels, the NSE Nifty is expected to hold above the intermediate support level of 9,019 points.

“Technically, with the markets remaining in uptrend, traders will need to watch if the Nifty can now hold above the intermediate supports of 9,019 points for the uptrend to continue,” Jasani explained.

In addition, the recently released US non-farm payroll employment data might provide some support to the key indices.

Last Friday, the US Bureau of Labour Statistics reported that total non-farm payroll employment increased by just 98,000 in March , while the unemployment rate declined to 4.5 per cent.

The data assumes significance as it acts like a gauge for the likelihood of a rate hike by the US Federal Reserve.

A rate hike can potentially lead FPIs away from emerging markets such as India, and also dent business margins — as access to capital from the US becomes expensive.

The provisional figures from stock exchanges for last week showed an inflow of foreign funds worth Rs 754.89 crore during the week, while domestic institutional investors (DIIs) bought scrips worth Rs 48.54 crore.

Figures from the National Securities Depository (NSDL) disclosed that FPIs bought equities worth Rs 4,995.46 crore, or $769.96 million, during April 3-7.

Last week, the Indian equities markets inched up on the back of healthy inflow of foreign funds and a strong rupee.

However, gains were capped due to global geo-political tensions and the Reserve Bank of India’s status quo on interest rates in its first bi-monthly monetary policy review of fiscal 2017-18.

Consequently, the trade week saw the barometer 30-scrip Sensitive Index (Sensex) of the BSE gain a mere 86.11 points or 0.20 per cent to close at 29,706.61 points, while the wider 51-scrip NSE Nifty closed at 9,198.30 points — up 24.55 points or 0.27 per cent.

The domestic markets will remain closed on Friday, April 14, on account of Dr. Baba Saheb Ambedkar Jayanti and Good Friday.