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Earnings, global trends to drive markets this week, say experts

Monday, January 07, 2019

Quarterly earnings from TCS and Infosys, movement of the rupee and developments surrounding the US-China trade talks will guide the domestic equity indices this week, say experts.

Macroeconomic data related to inflation and industrial production will also be tracked by participants, they added.

"Markets will look forward to the US-China trade talks and Q3 results season starting this week," said Vinod Nair, Head of Research, Geojit Financial Services.

IT majors TCS and Infosys will kick-start the earnings season later this week.

"A key trigger for the market will be GST meet and another round of cuts in tax rates on many of the items. Not just that, we have TCS lined up with earnings along with Infosys, IndusInd Bank.

"So, all in all a lot of big names will be driving the cues for its sector and will be watched critically. Post that, manufacturing numbers, industrial production and inflation. It will be a volatile week but certainly where we may see some directional move," said Mustafa Nadeem, CEO, Epic Research. The GST Council is slated to meet on January 10.

Besides, movement in the rupee, crude oil and investment trend by overseas investors would influence the trading sentiment, analysts said. According to V K Sharma, Head PCG and Capital Markets Group, HDFC Securities, "On economic front, this week data to watch out for is industrial production numbers."

Global markets rose Friday after China announced new trade talks with the US.

A US government delegation will visit China early this week for the first face-to-face talks since President Donald Trump and his Chinese counterpart Xi Jinping agreed on a temporary truce in the trade war.

FPI outflow at Rs 83,000-cr in 2018 on crude price rise, rupee depreciation
Overseas investors pulled out over Rs 83,000 crore from the capital markets in 2018, after pouring in a record Rs 2 lakh crore in the preceding year, on the back of rate hikes in the US, rise in global crude prices and rupee depreciation.

Moreover, the flows are expected to be range-bound in 2019 as FPIs may continue with a cautious stance until there are concrete signs of economic recovery and certainty over the formation of a stable government after the general elections, said Himanshu Srivastava, a senior analyst at Morningstar Investment Adviser.

Foreign portfolio investors (FPIs) made a net withdrawal of about Rs 83,146 crore from the Indian markets in 2018. This comprises Rs 33,553 crore from equities and Rs 49,593 crore from the debt market, according to data available with depositories.

This was the worst year for Indian capital markets in terms of overseas investment since 2002, the last year for which segregated FPI data for equity and debt markets are available. "Rate hikes in the US and reshuffling of portfolio money across the globe, rupee depreciation and crude rise were all contributors for higher FPI pull out," said Vidya Bala, head of mutual fund research at FundsIndia.Com.

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