Q3 results, macro-data to determine equity indices trajectory

Mumbai : The upcoming quarterly results season, along with the release of macro-economic data points on industrial production and inflation, are expected to determine the trajectory of key equity indices next week.

According to market observers, global cues such as crude oil prices, combined with the direction of foreign fund flows and the rupee's movement against the US dollar, will also impact investors' risk-taking appetite.

"Earnings season for Q3 (third quarter) with IndusInd Bank and TCS (Tata Consultancy Services) release would be closely watched, as the same have to catch up with the recent PE (price-to-earnings) expansion," Devendra Nevgi, Founder and Principal Partner, Delta Global Partners, told IANS.

"The CPI (Consumer Price Index) data out on Friday would be closely watched. If much above 5 per cent, this would dampen the sentiment in the markets, especially for the banking and NBFC sectors given the fact that the GDP (2017-18) provisional estimates were already lower."

The Q3 earnings result season will be kicked-off from next week. IT major TCS is expected to be the first bluechip firm to come out with its Q3 result on January 11, (Thursday).

"The market is trading at premium valuation supported by strong liquidity on expectation of earnings revival and positive global cues. In recent times, higher oil prices, rising inflation and the RBI's hawkish stance are warning signs for the market," said Vinod Nair, Head of Research, Geojit Financial Services.

"Further, the market is wary of a populist budget given this is the last (full) one before the general election. In the immediate future, the market will look for more budget-related cues and progress of the Q3 results season."

Apart from TCS, companies like Infosys, Gail, Bajaj Corp, IndusInd Bank and Shree Cement are expected to announce their quarterly results in the coming week.

"It is expected that December quarter earnings would positively surprise the street in select companies," said D.K. Aggarwal, Chairman and Managing Director of SMC Investments and Advisors.

"Besides, global cues, macro-economic data, investment by foreign and domestic institutional investors (FIIs ad DIIs), the movement of rupee against the dollar and crude oil price movement will dictate the trend of the market in the week ahead."

Apart from the Q3 results, investors will look out for the upcoming macro-economic data points such as the IIP (Index of Industrial Production) and Balance of Trade figures.

The Central Statistics Office (CSO) is slated to release the macro-economic data points of IIP and CPI on January 12, Thursday.

On the currency front, the rupee had strengthened by 50 paise to close at 63.37 against the US dollar during the week ended on January 5.

Investment-wise, provisional figures from the stock exchanges showed that FIIs turned net buyers and purchased scrips worth Rs 1,738.44 crore.

Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors invested in equities worth Rs 1,618.27 crore, or $254.14 million, from January 1-5.

On technical levels, the underlying trend of the National Stock Exchange's (NSE) Nifty50 remains bullish.

"Further upsides are likely once the immediate resistances of 10,566 points are taken out. Weakness could emerge if the supports of 10,520 points are broken," said Deepak Jasani, Head of Retail Research for HDFC Securities.

Last week, the key Indian equity indices -- the BSE Sensex and the NSE Nifty50 -- rose for the fifth consecutive week.

Consequently, the 30-scrip Sensitive Index (Sensex) of the Bombay Stock Exchange closed higher by 97.02 points or 0.28 per cent at 34,153.85 points.

Similarly, the Nifty50 of the NSE rose by 28.15 points or 0.26 per cent to 10,558.85 points.