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Q2 earnings to drive stock markets; Infy, banks in focus

Monday, October 23, 2017

Stock market is expected to be driven this week by a busy earnings season including by banks and heavyweight bluechips like Infosys and ITC for September quarter - the first quarterly report card showing impact of GST on India Inc.

The expiry of monthly derivative contracts on Thursday will also have an impact while some analysts expect the benchmark indices Sensex and Nifty to consolidate at current levels, unless banks report a particularly bad set of quarterly results.

Those scheduled to announce their second-quarter results include ICICI Bank, HDFC Bank, Kotak Mahindra Bank, IDFC Bank and Vijaya Bank, while a number of IT firms including Infosys and HCL Tech will also release their quarterly earnings this week.

Other major results scheduled for this week include those from ITC, Hindustan Unilever, Maruti Suzuki, IOC, ONGC, Ambuja Cements, Asian Paints, L&T Finance, M&M Financial Services, Tata Communications and Biocon.

"The second quarter results will gather significance in coming days with the earnings of Index heavyweights which will dictate the market's momentum. On global front, USFED chair speech towards the weekend will be watched closely," said Vinod Nair, Head Of Research at Geojit Financial Services.

The market will also see the IPO of Reliance Nippon Life Asset Management, as also listing of India Energy Exchange this week. So far, the corporates have reported a mixed set of results for the second quarter while the benchmark Sensex began the current Samvat 2074 on a weak note by plunging 194 points during Muhurat trading on Thursday when it closed at 32,389.96 points. Last week, it had scaled an all-time peak of 32,699.86 points while the total gain for the Sensex for the previous fiscal was more than 16%.

The overall investor wealth, measured in terms of cumulative market capitalisation of all listed stocks, rose by more than Rs 25 lakh crore in the previous Samvat, but some analysts expect the markets to consolidate at the current levels and believe any major rally would need strong global cues.

On the negative side, the markets may slide from current levels if banks report dismal results and continuing burden of bad loans, while another downside risk may come from any major negative impact of the new GST (Goods and Services Tax) regime which kicked in from July 1.

"NPA divergences have also continued to be a strong theme in banks' results, putting the banking stocks under pressure, but market remains expectant of more GST related positivity in the coming days," said Anand James, Chief Market Strategist, Geojit Financial Services.

Six of top 10 companies add Rs 48,372 cr to market cap
The combined market valuation of six of the 10 most valued companies surged by Rs 48,372.16 crore last week, with Reliance Industries Ltd (RIL) emerging as the biggest gainer.

While RIL, Tata Consultancy Services (TCS), HDFC Bank, ITC, Hindustan Unilever Ltd (HUL) and ONGC saw gains in their market capitalisation (m-cap) in the holiday-shortened week ended on Wednesday, HDFC, Maruti Suzuki India, Infosys and SBI suffered losses.

The RIL's valuation zoomed Rs 23,462.1 crore to Rs 5,78,636.87 crore. The m-cap of TCS jumped Rs 6,183.15 crore to Rs 4,95,618.63 crore and that of ITC advanced by Rs 5,482.64 crore to Rs 3,29,384.88 crore. The mcap of ONGC went up by Rs 5,261.63 crore to Rs 2,23,554.96 crore and that of HDFC Bank rose by Rs 4,173.16 crore to Rs 4,83,104.01 crore.

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