Corporate Results To Hold Key For Markets In Coming Week

Mumbai, November 2: Markets are peaking at an all time high riding on the hopes of a more favourable taxation policy from the finance ministry. On Friday, the 30 share Sensex closed 36 points or 0.09 per cent higher at 40,165.03 comparing the previous day’s close. Nifty ended the trading day in the green with the index closing over 13 points or 0.11 per cent higher at 11,890.60.

The rally Samvat 2076 began on stronger note

Vinod Nair, Head of Research at Geojit Financial Services, says Samvat 2076 began on a stronger note as Sensex hit record high on strong buying ahead of the F&O expiry and slew of positive cues like better Q2 result, US Fed policy stance and easing trade war tensions. “Stable set of corporate result announcements and further revision in earnings based on tax cut incentives boosted overall investor sentiments,” Nair said. Financial led from the front because of narrowing asset quality concerns in PSU’s. However weak two wheeler sales and manufacturing numbers limited the upside on the last trading day of the week.

Market week ahead

Nair adds that with no major events due next week market to focus on the next leg of corporate result announcements. Key players like HDFC, Tech Mahindra, Titan, Sun Pharma to announce results and auto companies will be in radar after they reported weak set of sales for October. “Better liquidity from FIIs and MFs will maintain a positive sentiment in the domestic market given de-escalation in political risk and focus over upcoming reforms, to revive growth,” he said.

Weak monthly two-wheeler sales

Also last week markets traded flat due to weak monthly two-wheeler sales and manufacturing growth for the month of October. During the last 5 weeks, market has rallied near to the all-time high, this trend may continue in the short-term but also a point of discussion since possibility of further stimulus from the government seems limited in the short-term. “Government fiscal position going forward will depend on divestment and other sources of revenue. Bond yields fell today given weak fiscal position,” Nair added.

Indices at an all time high

In the last week, Sensex hit an all-time high of 40,392 while Nifty claimed the 11,900 mark on the back of positive global cues and upbeat domestic sentiments. Also the Nifty witnessed profit-booking in the previous week with an inside day range. “This week was much decisive as the earnings from a few companies boosted the sentiment while the buying was seen across except one or two space that witnessed some profit booking,” said Mustafa Nadeem, CEO, Epic Research.

What lies ahead?

In the coming week, the outperformance can be seen from PSUs followed by metal and Auto space. The buying momentum that has picked up in Mid-Cap and Small-Cap, which added almost 5-7 per cent in the last one month, is expected to continue to perform. There may be some profit booking in energy and reality space along with IT as well.

US Fed rate cut

“There were a few factors that aided this bullish note for investors. The US Fed rate cut has a positive impact on Asian markets which led to improved sentiment in key global indices. Secondly, on the domestic front, we have seen some moderation in FPI/FII data which was negative for the last few months with October being a net positive,” Nadeem added.

Ruling on LTCG, DDT to attract foreign investors

According to experts the government reviewing the LTCG and DDT to attract a large chunk of foreign investors in equity markets also had a positive impact. November rollover data showed much better numbers with Nifty seeing above average while the underperformance from Bank Nifty continued. “So we do expect Nifty to continue its outperformance with muted action in Nifty bank, which is skewed to private banks,” Nadeem addd.

Earnings to hold key

In the coming week, markets will have earnings numbers from HDFC, Dabur, Tata Steel, Canara Bank and Divis and Titan which have been outperforming. A lot will also depend on how global markets are performing as they will direct domestic sentiments. “We remain bullish as far as Nifty is sustaining above 11,700 and dips should be utilized,” Nadeem said.