Sensex, Nifty Week Ahead: Corporate Earnings, Geopolitical Concerns To Drive Markets

The Indian equity benchmarks declined nearly 2 per cent in the holiday-shortened week that ended on April 13. The Sensex and Nifty fell nearly 2 per cent each in the three-day trading week with both the benchmarks declining in all the three sessions. Going ahead markets are likely to take cues from corporate earnings, geopolitical concerns prevailing between Russia and Ukraine amid rising inflation globally.

"Domestic markets witnessed some selling pressure in a short trading week as investors remained cautious given sustained high inflation and its impact on economy. Going ahead, market is likely to remain volatile till the inflationary pressure persists, raising scope for aggressive rate hike by Central Banks globally. Q4FY22 result season has started with TCS number being in line with expectation. Two index heavy weight Infosys and HDFC Bank will be announcing their results over the long weekend to which market would react on Monday Overall we expect healthy 4QFY22 earnings which should drive the stock specific action in the market," said Siddhartha Khemka, gead - retail research, Motilal Oswal Financial Services.

Over the holiday curtailed week, index bellwethers Infosys and HDFC Bank announced their earnings for quarter ended March 2022 and for full financial year.

Infosys, the country's second largest software services company, reported net profit of Rs 5,686 crore marking a decline of 2.11 per cent from Rs 5,89 crore in the previous quarter. On an annual bass, Infosys' profit rose 12 per cent from Rs 5,076 crore during the same quarter last financial year. Going ahead the IT giant has guided for revenue growth in range of 13-15 per cent and operating margin growth of 21-23 per cent for the current financial year.

The company clocked $16.3 billion in revenues with the highest annual growth in the last decade of 19.7 per cent in constant currency with a robust operating margin of 23.0 per cent. Growth was broadbased, supported by continued momentum in large deal wins with total contract value (TCV) of $9.5 billion. EPS grew by 15.2 per cent in rupee terms. Free cash flow (FCF) crossed $3 billion for the year, Infosys said in earnings release.

Infosys reported a subdued performance in 4QFY22 with EBIT margin coming in at 21.6 per cent, 164bps below our estimate of 23.2 per cent. Revenue grew by 1 per cent QoQ/19 per cent YoY in USD to US$4,280mn, 2.6 per cent below our estimate of US$4,395 (consensus US$4,385). Sequential constant currency growth came in at 1.2 per cent vs. our estimate of 3.7 per cent, said Mitul Shah, head of research at Reliance Securities.

HDFC Bank, the country's largest private sector lender, on Saturday reported net profit of Rs 10,055 crore for quarter ended March 2022 marking an increase of 23 per cent from Rs 8,186.51 crore during the same period last financial year. Jump in profit came on the back of sharply lower provisioning for non-performing assets (NPAs). Its provisions declined 29 per cent annually to Rs 3,312 crore from Rs 4,694 crore in the year ago period.

HDFC Bank's net interest income or the difference between interest earned on loans and interest expended on deposits advanced 10 per cent to Rs 18,872.74 crore from Rs 17,120 crore in the same quarter last year.

Meanwhile, ACC, Larsen & Toubro Infotech, Tata Steel Long Products, Tata Elxsi, CRISIL, HCL Technologies, Cyient, Nestle India, Rallis India, Tata Communications and ICICI Bank will report their March quarter earnings next week.