Second quarter results to set tone for SEs

“The result season is starting this week and corporates would give their guidance for the rest of the year, which would set the future undertone of markets,” SMC Global Securities Research Head (Retail) Saurabh Jain said. IT bellwether Infosys will kick-off India Inc’s earning season by announcing its financial results on Friday, Oct 15.

According to an earning preview report by Motilal Oswal, Sensex companies’ earning is likely to grow by 22 per cent in the second half of this fiscal, against 25 per cent witnessed in the first half. The moderation is due to a higher base, the brokerage house said.

“It seems that new and fresh triggers are needed to take the markets significantly higher from here. September quarter earning season will be important for markets to take direction for the short to medium term,” domestic brokerage ICICIDirect said in a note. Brokers said markets IIP data for August, scheduled this week, would be watched keenly.

Pressure on markets
While analysts believe there may be some pressure on markets during the week, chances of any significant downside are unlikely, unless any large negative development takes place globally. They also said some correction could not be ruled out in the secondary market on account of state-run Coal India Ltd’s mega IPO, which opens next week on October 18. Many big investors may book profit at existing higher levels for investment in CIL’s public offer, said a broker.

Domestic market that has witnessed a strong rally since early September, paused for a breather during the last two weeks, when the Sensex lost 1 per cent to end at 20,250.26, while the Nifty also fell by 0.7 per cent to end at 6,103.45.

Though both the indices started the week on a strong note and tried to go up, they could not hold on to the gains, due to profit booking at higher levels. “After a vertical rise, we are witnessing consolidation of the previous rise,” Angel Broking said in a note.

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