Healthy Q4 results to move markets in upcoming week

Equity market ended the week in losses amidst high inflation data and worry over its impact on economy. Nifty/Sensex fell 1108/309 points (-1.7 per cent/-1.9 per cent) to close at 17476/58339. Midcap100/Small100 too fell by -1.3 per cent/-1.5 per cent. Except Energy which gained 2.5 per cent, all the sectors ended in red. IT was the biggest loser – down 2.9 per cent followed by Realty, Metals and Auto which lost around 2 per cent.

FIIs continued to be net sellers in this truncated week, having sold equities worth more than Rs 6,300 crore while DIIs were buyers to the tune of Rs 1,800 crore.

Global cues were also weak as US inflation hit 40 year high to 8.5 per cent in March’22. Gains were also capped on account of pressured from rising cases of Covid-19 in China and failing peace talks between Russia and Ukraine. ECB policy outcome would be closed watched over this week.

On the domestic front, Nifty snapped two–week winning streak as profit-booking was seen in the market after the data showed India’s retail inflation soared to a 17-month high of 6.95 per cent in March, much above the RBI’s upper tolerance band.

The investors weighed inflation risks against the start of the Q4 earnings season and remained cautious.

On the positive side, India’s merchandise exports grew 20 per cent YoY and stood at an all-time high of $42 billion in Mar’22. On the other hand, Imports also grew 24 per cent on account of large petroleum import.

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. Index heavy weights 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.

(The writer is Head-Retail Research MOFSL)

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