Markets lookout for India Inc’s earnings

Indian equity markets could not sustain the positive momentum of last week and turned negative this week amidst concerns over more debt distress, weak macro data points and sluggish auto sales numbers.

Thus it failed to cheer the 25 bps rate cut by RBI on Friday which was already factored in by the market. Further RBI also revised its growth forecast for this year down to 6.1% from 6.9%, which aggravated the concerns over an economic slowdown. However, it maintained its accommodative stance and said it would keep that position as long as it is necessary to revive economic growth. Market sentiments also got dampened during the week due to weak global cues wherein US President Donald Trump is considering the imposition of the US tariffs on European goods and delisting of Chinese companies from US stock exchanges.

Nifty 50 closed at 11,175, while Sensex closed at 37,673, both down 3% for the week. Selling pressure was seen across the broader market with both NSE Mid-cap and Small-cap Index being down 4.3% and 4.7% for the week, respectively.

On the sector front, all sectors closed in red except IT (+0.7%) and Energy (0.9%). Banking (-7.2%), Media (-7.1%), Metals (-6.4%), Financial Services (-5.2%) and Realty (-5.2%) were the biggest losers, while Auto, FMCG and Pharma lost in the range of 2-4%.

Foreign Institutional Investors (FIIs) again turned net sellers for the week and sold equities worth Rs 3,262 crore. Domestic Institutional Investors (DIIs) on the other hand continued to remain net buyers, having bought equities worth Rs 3,477 crore during the week.

Going ahead, 2Q earnings season would begin next week with TCS and Infosys declaring their results. The market would cautiously watch out for the results and the management narratives with regards to the corporate tax rate cut. It would also await more measures from the government which would boost economic growth. On the global front, markets would watch out for US job report that would determine the Fed’s next move. Other key monitorable would be political situation in the US, US-China trade deal, geo-political tensions, oil and rupee movement.

Technically, Nifty formed a Bearish Candle on a daily and weekly scale as sustained selling pressure was seen at higher levels and also broken its 200 DEMA to closed below 11,200 levels. Resistance is gradually shifting lower and now till it holds below 11,250 zones it could extend its weakness towards 11,110 then 11,050 levels while on the upside hurdle is seen at 11,250 then 11,330 zones.

(The writer is the Head of Retail Research, MOFSL)