Moneycontrol
Jul 16, 2017 11:20 AM IST | Source: Moneycontrol.com

Market Week Ahead: Here are 8 factors that could drive the Street from July 17

Key earnings, upcoming Parliament Session along with global cues could impact movements on the Street.

The market failed to extend the rally on Friday as investors preferred profit booking after the Sensex added 677 points in the previous four consecutive sessions, and also looked for more corporate earnings.

Benchmarks started off on a strong note, with the Nifty surpassing 9,900 level for the first time following positive leads from Asia and Infosys earnings, but could not hold for long.

The market was rangebound with negative bias for a major part of the session. The 30-share BSE Sensex managed to hold the 32,000 level, though it ended down 16.63 points at 32,020.75. The 50-share NSE Nifty fell 5.35 points to 9,886.35 after hitting an intraday high of 9,913.30 on weak breadth, but the BSE Midcap outperformed, up 0.22 percent.

"Participants are feeling bit relieved after the IT majors' result amid expectation of a bad quarter, but it's just the beginning of earnings season," Jayant Manglik, President, Retail Distribution, Religare Securities said.

On a weekly basis, the Nifty ended with a gain of over 2 percent, while the Sensex advanced by 2.1 percent. Nifty midcap and Nifty smallcap also registered gains, advancing 0.96 percent and 0.61 percent, on a weekly basis. Nifty PSU Bank was the major gainer this week, advancing by 4.12 percent.

The upcoming week could see the market looking forward to major triggers such as the upcoming Parliament Session. Along with that, the week could also see earnings action as over 95 BSE companies will report earnings. These include Reliance Industries, ACC, Jubilant Foodworks, Crisil, Ultratech Cement, Wipro, Bajaj Auto, Kotak Bank and Ashok Leyland.

Moneycontrol takes a look at 8 factors that could have a bearing on the market in the coming week.

Earnings

Over 95 companies will be reporting their earnings in the upcoming week. ACC, Jubilant Foodworks, Crisil, HT Media, Jay Bharat Maruti, UltraTech Cement, Bajaj Finserve, Amtek Auto, Mindtree, Kotak Mahindra Bank, MRPL, Quess Corp, and Reliance Industries, among other major companies, will be reporting their earnings this week. Along with them, two major index heavyweights—Hindustan Unilever and Wipro— will also be coming up with their June quarter numbers. Trends in HUL post GST roll out, while Wipro’s numbers will help in understanding the times ahead for the IT industry.

Hindustan Unilever’s (HUL) earnings to help know GST impact

Fast moving consumer goods (FMCG) major HUL will report its numbers on July 18. The Street would watch out for trends from this company as the GST rollout is said to have benefitted these companies. Additionally, the developments around de-stocking in the quarter passed by ahead of GST could also be reflected in this case. The company had posted a standalone net profit of Rs 1,183 crore, a 6.2 percent growth over the same period a year ago. For FY17, HUL had posted a consolidated net profit of Rs 4,490 crore, up 8 percent.

Post TCS and Infosys, Wipro results hold key

Software firm Wipro’s results hold the key going forward as results from Infosys and TCS have indicated mixed trends. While brokerages highlighted the margin pressure in case of Infosys, CLSA said that the revenues were in line with estimates, while deal wins improved. Infosys, meanwhile, had a strong performance and had a upward revision in its dollar revenue guidance, said IDFC in its report. On the other hand, Kotak too hailed the solid performance of the company, with new services’ contribution at 10 percent of overall revenues.

Monsoon

The Street will watch out for the progress of monsoon in the country. A major part of the rally over the past couple of months have been on the back of better monsoon prospects. Rural-focused stocks and FMCG companies soared on improved demand and profitability prospects.

As per the India Meteorological Department’s (IMD) report, rainfall had largely covered larger parts of the country and were seen advancing furthermore. While Northeastern states continue witness immense floods, monsoon in states such as Maharashtra and Madhya Pradesh, among others, have witnessed normal rainfall.

Technical Outlook

As per a report by HDFC Securities, Nifty as per smaller and larger timeframe is still positive and there is no confirmation of any reversal pattern at the new highs. “But, the overall chart pattern is hinting at the possibility of beginning of correction from the highs in the next 1-2 weeks,” the report added. The maximum upside, it added, could be limited up to 10,000 mark and there is a more possibility of resumption of profit booking in Nifty from the highs.

Vijay Singhania of Trade Smart Online also believes that being cautious at this point would not harm. “Having said that the overall trend continues to remain solid and we expect the current move to continue towards the projected breakout target of 9970 in the coming week. Support on the downside has been further upgraded to the 9820 levels,” Singhania, Founder-Director, Trade Smart Online said in a statement.

Corporate Action

Pharma companies such as Zydus, Alkem Laboratories, as well as Cipla could be on investors’ radar on the back of business developments around the company. Zydus has reportedly received tenative approval from the US FDA for fingolimod capsules, while Alkem saw an inspection completion at its Bioequivalence unit for Taloja and that no Form 483 was issued for the same. Cipla, on the other hand, has sought shareholders’ nod for the issuance of debt securities up to Rs 2,000 crore.

Additionally, there has been a change of management at Oriental Bank of Commerce as Mukesh Jain has been appointed as its CEO and MD. From the energy space, Indraprastha Gas has received a nod to lay gas charging discussion network in Gurugram.

Stocks in focus

Dr Reddys, Kalyani Forge, Everest, Shankara Building, Tata Elxsi, Alembic Pharma, NOCIL, Biocon, Crompton and Edelweiss among others will be conducting their annual general meetings (AGMs) to discuss their dividend issues.

Additionally, Navin Flour will be meeting on July 19 to discuss a stock split, while Intellect will be meeting on July 17 to discuss a rights issue at a premium of Rs 81. Moreover, Grasim will also be meeting on July 19 to decide on the scheme of arrangement for the company.

Global Cues

The Street could also look forward to economic data from China, which is set to announce its gross domestic product (GDP) data along with IIP data. Meanwhile, CPI data for Eurozone is also set to be announced. Additionally, European Central Bank and Bank of Japan will also announce their interest rate stance on Thursday. Both the central banks are expected to rates unchanged for the time being.
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