Q3 results, US GDP to drive markets

Maruti, Colgate, TVS and TaMo will submit their report cards

Domestic equities remained lacklustre last week amid mixed global cues. Nifty traded sideways for most part of the week and finally ended with marginal gains of 0.4 per cent at 18,028 levels. Broader market, however, ended on the weaker side with loss of 0.7 per cent/1.1 per cent in Midcap100/Smallcap100. IT sector was the biggest gainer with gains of 2 per cent on the back of inline results of IT majors and strong deal pipeline. FII selling intensity reduced drastically this week, with them turning buyers on two days.

With banking and financial companies such as ICICI Bank, Kotak Bank, SBI Life, Yes Bank and IDFC First announcing their results over the weekend and Axis Bank and Canara Bank following in on Monday, the spotlight at the start of the week will be on banking stocks. Majority of corporate earnings growth in this quarter is expected to be led by BFSI sector.

Reliance Industries and Ultratech Cement too reported their numbers over the weekend.

Also Read: Budget 2023: Wish list to propel growth

This week is result heavy with many auto and consumer majors like Pidilite, Maruti, Colgate, TVS Motors, Bajaj Auto and Tata Motors would declare their earnings. Along with BFSI, auto is other sector which is expected to report good numbers and drive overall Q3FY23 growth.

Overall, this week market is likely to remain in a limited range with stock specific reaction to Q3FY23 result outcome and expectations running around the upcoming budget. Apart from banking and auto, momentum is likely to continue in metals, IT and capital goods’ space. Metal stocks would be in focus as base metal prices are surging globally, due to shortage of inventory. On the other hand, capital goods sector is witnessing strong order inflow and there is expectation of increased spending in budget as well. In the budget, though we don’t expect any major policies and announcements, we expect government to target capital spending at Rs8.8 lakh crore in FY24E which is a growth of 17 per cent YoY, and would rise to ~3 per cent of GDP.

On the sectoral front, the residential real estate sector ended CY22 on a high note as sales in the top 8 cities surged to a nine-year high of ~313,000 units, as per Knight Frank. Launches increased to ~328,000 units in CY22, exceeding sales for the first time in the last nine years, aided by robust demand and low inventory. As per Knight Frank, residential real estate prices across the markets rose by 4-7 per cent YoY in CY22. We believe healthy demand momentum is likely to continue for the medium term and expect real estate companies under our coverage to report 15 per cent YoY growth in pre-sales for FY24.

On the economic calendar front, PMI data would be released for US, Europe and UK on Tuesday followed by US GDP data on Thursday. Thus global markets would be reacting to them along with the corporate results outcome.

(The author is Head of Retail Research, Motilal Oswal Financial Services Limited)