Top five factors that may chart market direction this coming week

NEW DELHI: Rising geopolitical tensions, disappointing March quarter earnings numbers from InfosysBSE -0.71 % and the double whammy of a contraction in February industrial output and a sharp jump in retail inflation to a five-month high in March were enough to roil the domestic market last week. Not to mention, US President Donald Trump’s comment that the dollar was getting ‘too strong’, which put another nail in the coffin.

During the holiday-truncated week, the domestic equity indices ended lower in three out of four sessions with the S&P BSE Sensex losing 0.83 per cent and the broader Nifty50 falling 0.51 per cent on a weekly basis (April 10- April 13).

On Thursday, the 30-share index of BSE closed 182 points down at 29,461, while NSE’s Nifty50 shed 53 points to end at 9,150.

Among key events, IT bellwether Infosys on Thursday disappointed investors, reporting a 2.83 per cent drop in consolidated net profit at Rs 3,603 crore for the quarter ended March 31 compared with Rs 3,708 crore posted for the sequential quarter ended December 31, 2016.

However, the company announced a big bonanza for shareholders, pledging to return Rs 13,000 crore, or $2 billion, from its cash reserves as dividend or share buyback in FY18. The board announced a dividend of Rs 14.75 per share.

Among specific stocks, Ind-SwiftBSE 3.64 % and Unjha FormulationsBSE 9.96 % emerged major gainers, rising 74 per cent and 50 per cent, respectively during the week gone by. Adani PowerBSE 0.00 % ended as the worst laggard of the week, falling 24.66 per cent. Abhinav Leasing & Finance was the second worst performer of the week, as the stock nosedived 23 per cent.

Will the market manage to beat the blues and make a comeback this coming week? Nobody can say that, but there are a host of triggers that are going to set the mood of the market. Going by the buzz on Dalal Street, here is a list of top five factors that may sway the market next week.

Geopolitical worries: The ongoing geopolitical tension is likely to have a strong impact on global financial markets, including India. The situation took an ugly turn on Tuesday when North Korea warned of a nuclear attack on the US at any sign of American aggression, as a US Navy strike group steamed toward the western Pacific – a force US President Donald Trump described as an “armada”.

Trump, who has urged China to do more to rein in its impoverished ally and neighbour, said in a tweet that North Korea was “looking for trouble” and the US would “solve the problem” with or without Beijing’s help.

Also, dropping of the biggest non-nuclear bomb MOAB (massive ordnance air blast bomb) by the US on ISIS targets in Afghanistan on Thursday is likely to have a bearing on stocks globally.

Earnings: A slew of corporate earnings, including those from IT giant Tata Consultancy ServicesBSE -0.30 % (TCS), are lined up for the week ahead, which may chart market direction during the week.

With sentiments dampened by Infosys’ poor Q4 show, investors are eyeing the numbers from the Rajesh Gopinathan-led TCS, which is scheduled to release its March quarter earnings on Tuesday (April 18).

Will TCS provide some respite to shareholders in the IT industry is a thing to wait and watch. The company had reported a 2.9 per cent QoQ rise in net profit at Rs 6,778 crore for the December quarter.

This apart, other companies scheduled to release their financial results next week include IndusInd BankBSE -0.12 % and YES BankBSE -0.36 % (on Wednesday). Hindustan ZincBSE -0.89 % and MindTreeBSE -1.40 % on Thursday (April 20) and cement major ACCBSE 0.58 % and private sector banking major HDFC BankBSE -0.23 % on Friday.

Inflation number: The government is scheduled to release wholesale price-based inflation for March on Monday (April 17). The WPI inflation stood at 6.55 per cent (provisional) for the month of February 2017 (over February 2016) as compared to 5.25 per cent (provisional) for the previous month and -0.85 per cent during the corresponding month of the previous year.

Technical factors: The domestic market is looking frothy as the indices seem to be feeling the heat near their all-time high levels. “The momentum seems to be slowing down, and with a lot of uncertainty over the geopolitical scenario and disappointing quarterly earnings of Infosys, we may see some consolidation in the near-term,” said Vijay Singhania, Founder-Director, Trade Smart Online, a leading discount brokerage firm.

“Last week, the Nifty50 closed just about the resistance level of 9,140 levels. If the Nifty sustains above the 9,140 level, then traders could expect a positive move in the Nifty towards 9,180 followed by 9,240 levels. If its trades below the 9,140 level on Monday, then traders may see a downward move, which could take the Nifty50 towards 9,125, followed by 9,020 level,” Singhania said.

Global cues: On the global front, China is expected to release industrial production data for February 2017 on Monday whereas the US industrial production data for March 2017 is set to release on Tuesday. In addition, the US Fed’s Beige Book is slated to release on Wednesday.

According to Investopedia, the Beige Book is a commonly used name for the Fed report called the Summary of Commentary on Current Economic Conditions by Federal Reserve District. It is published just before the FOMC meeting on interest rates and is used to inform the members of changes in the economy since the last meeting.

Also, the preliminary Markit PMI Composite index for euro zone 2017 for April is due on Friday, April 21.

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