Quarterly results, GST meet to guide equities (Market Outlook)

Mumbai, Jan 15 (IANS) Quarterly earnings results, coupled with government’s efforts to build a consensus over the contours of the Goods and Services Tax (GST) are expected to guide the trajectory of the Indian equity markets during the coming week.

Besides, trends in the foreign funds’ flows, rupee movement, global crude oil prices and the assessment of the demonetisation impact would be other major factors that will influence the movement of the equities markets.

“Markets will focus on the corporate earnings for 3Q FY 2017 to assess the impact of demonetisation, especially on the domestic cyclicals, consumption and bank stocks,” Devendra Nevgi, Chief Executive of Zyfin Advisors, told IANS.

“From the data so far available, it seems that November was not so good, but the December data appears mixed.”

Nevgi pointed out that the build-up of expectations from the upcoming Union Budget will be another major theme for the markets.

“The expectation from the Union Budget on 1st February are running high from a sentiment perspective on the pump-priming measures for the economy,” he elaborated.

According to Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services, investors will closely watch the movement of FII (foreign institutional investor) flows.

“FIIs have remained net sellers in equities persistently and prospects for their return will be closely followed,” James explained.

“Meanwhile, they have also been persistent buyers in F&O (futures and options) which had kept indices directional.”

In terms of foreign inbound investments, FIIs had sold Rs 1,103.96 crore worth of equities during the week ended January 13, provisional figures from the stock exchanges have showed.

Similarly, figures from the National Securities Depository (NSDL) disclosed that FPIs (foreign portfolio investors) remained net sellers in the stock market.

They sold a total of equity and debt instruments worth Rs 2,685.03 crore, or $394.38 million, from January 9 to 13.

In addition, the GST panel’s meeting would be tracked closely for any signs of consensus, James opined.

On January 4, Finance Minister Arun Jaitley said that he hopes to resolve the two vexed issues of Integrated GST (iGST) and dual control at the Council’s next meet onJanuary 16.

Jaitley at that time admitted that the GST Council “was racing” against time to meet the pan-India indirect tax’s implementation deadline of April 1, 2017.

“We could also get to have a better idea as to the budget, whose scheduled date of February 1 has been threatened by elections in five states,” James predicted.

Recently, a pre-budget rally was triggered by expectations on more spending support from the upcoming Union Budget.

Nonetheless, the Indian rupee is likely to remain under pressure and trade within a range of 67.70/90 and 68.40/50.

“Lack of RBI’s (Reserve Bank of India) intervention and a constant drip of outflows from FPIs would ensure rupee under-performs the rest of Asia,” Anindya Banerjee, Associate Vice President for Currency Derivatives with Kotak Securities, told IANS.

“We remain of the view that USD/INR would trade within a range of 67.70/90 and 68.40/50. A break of this range is needed to trigger the next trend in USD/INR.”

On technical-levels, the NSE Nifty is expected to correct after last week’s bounce-back.

“Technically, the Nifty index could attempt to test the next targets of 8,460-8,520 points in the coming week,” Deepak Jasani, Head – Retail Research, HDFC Securities, told IANS.

“Short-term weakness could, however, emerge if the support of 8,382 points is broken.”

Last week, the key domestic indices gained around two per cent each, despite huge volumes of foreign funds’ outflows, depreciation in the rupee value and broadly mixed global cues.

The barometer 30-scrip Sensitive Index (Sensex) of the BSE surged by 478.83 points or 1.8 per cent to 27,238.06 points.

Similarly, the wider 51-scrip Nifty of the National Stock Exchange (NSE) rose by 156.55 points or 1.9 per cent to 8,400.35 points.

(Rohit Vaid can be contacted at rohit.v@ians.in)

–IANS

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