Earnings season begins this week; macro data in focus as well

Equity markets are expected to continue with their positive momentum this week as they take cues from the start of the January-March quarter earnings season, and global and local macro data. Focus would be on the Federal Reserve meeting minutes, European Central Bank policy meeting, and United States inflation data which investors will keenly await.

On the domestic side, focus would shift to Q4 earnings with TCS kickstarting the result season on 12th April. India’s retail inflation will be an important event to track especially in the light of sticky food inflation highlighted by the Reserve Bank of India.

Indian equities started the FY25 financial year on a strong note with Nifty touching new highs and continuing their momentum. The Q4 business updates from a few prominent companies were largely encouraging, driving stock-specific action in the market.

For the week Nifty gained 187 points (+0.8%) to close at 22,514 levels. Broader markets sharply outperformed with Midcap100 and Smallcap100 up 4% and 7% respectively. Infact ,Midcap100 touched a new high while Smallcap100 is just a few points away from its previous high.

All the sectors closed in green with PSU Banks, Metals and Realty being biggest gainers with gains of 4-5%. Strong business updates from some of the banks led to the bounce in the sector.Rising metal prices globally and a surge in India’s Manufacturing PMI to a 16-year high led to a rally in metal stocks.

Realty stocks saw momentum after unsold home inventory declined by 7% in January-March quarter in nine major cities in India as per PropEquity.

RBI kept the repo rates unchanged at 6.5% for the seventh consecutive time and maintained a ‘withdrawal of accommodation’ stance in line with market expectations. However, it maintained the GDP rate at 7% for FY25 while projecting a retail inflation of 4.5%.

Global markets on the other hand witnessed profit booking as worries resurfaced over the timing of rate cut by the Fed post the release of stronger economic data. Further crude oil prices surged to 5 month high of nearly $90 a barrel as OPEC+ ministers kept the Oil Supply Policy unchanged and even urged some other nations to increase compliance with output cuts. This somewhat dented sentiments.

Overall, we maintain our positive bias on the market encouraged by the strong business updates. We believe any dip can be viewed as a buying opportunity in the market.

(The writer is Head – Retail Research, Motilal Oswal Financial Services Ltd)