Earnings for Q4FY17, macroeconomic data and developments in global markets will be key factors to watch for.
The market continued its consolidation for third consecutive week, though it hit fresh life high of 9,273.90 on the Nifty and crossed psychological 30,000-mark intraday on the Sensex. Equity benchmarks gained 0.3 percent amid positive developments over GST front, status quo in RBI monetary policy, Federal Reserve minutes and US’ missile strikes at airbase in Syria that hit global sentiment on last day of the week.
In the coming truncated week, earnings for January-March quarter (Q4FY17), macroeconomic data and developments in global markets will be key factors to watch out for.
Experts feel the market is likely to consolidate further before getting direction on either side. It might get some direction on last day of the week, when earnings will be kicked off by Infosys on Thursday.
“As the market is entering in the earnings season, more consolidation is likely and stock specific move is likely to be at the forefront,” ICICIdirect says.
The research firm believes the trend of lower volatility is likely to continue which can fuel further upsides in the market. Only a move above 16 levels on India VIX will trigger any major profit booking trend.
According to Jayant Manglik of Religare Securities, initially, the market might continue to trade sluggish next week but that shouldn't deter traders to take positions in quality stocks on dips. It will eventually align to the earnings so short term fluctuations should be used as buying opportunity, considering the broader uptrend, he says.
He further says participants would also closely watch the developments on global front in the backdrop of the recent geo-political issue.
"If the correction comes it is going to be very healthy because post demonetisation we saw the markets correct briefly to 7900 on the Nifty and then it has been one way journey. I think there is too much of froth in the short term," Manish Sonthalia of Motilal Oswal says.
The market will remain shut on Friday for Good Friday and Dr Babasaheb Ambedkar Jayanti holiday.
Here are top 10 factors that likely to be in focus:-
Infosys & Earnings
January-March quarter earnings, which will be a key factor for next 6-7 weeks, will be kicked off by Infosys on April 13.
Jimeet Modi of SAMCO Securities says the market is not expecting any meaningful growth in Infosys because of appreciating rupee & niggling worry of US H1B Visa policy. However, Infosys is trading at 15 times TTM earnings, any positive surprise can take the stock to higher levels, he feels.
Meanwhile, overall earnings season is expected to be good and the recovery is likely to be sharp from FY18 onwards after earnings downgrades in previous two years, according to experts.
Vijay Singhania of Trade Smart Online says overall, he expects Q4FY17 earnings to be in line with Q3FY17, entire profit growth of Q4FY17 is likely to be driven by banks and metals. Domestic consumption and export companies (mainly IT and pharma) earnings are expected to remain subdued. Industrial companies are, however, likely to post a better quarter with double-digit topline growth.
For banks, after several quarters PSU banks' topline growth is expected to be similar to that of private banks.
Overall, Singhania expects FY17 Nifty EPS growth at 10 percent.
Enam Holdings is upbeat on earnings and believes that they will grow 20 percent in the next year as interest rate transmission will help. Results in the previous quarter (Q3) weren't bad either, Sridhar Sivaram of Enam Holdings said. In fact, earnings going forward will surprise the Street.
The Street will watch out for cues from macroeconomic data with numbers on factory data for February set to be released on April 12.
The Index of Industrial Production (IIP) bounced back in January, expanding by 2.7 percent year-on-year mainly due to better performance by capital goods segment.
The inflation data could also be on investors' radar. CPI inflation for March will be announced on April 12 and WPI inflation on April 14.
India's consumer price inflation (CPI) rose marginally to 3.65 percent in February from the level of 3.17 percent in the previous month. Meanwhile, the wholesale price index (WPI) rose 6.55 percent from 5.25 percent in February due to higher prices of fuel power and fuel.
Stocks In Focus
On Monday, a few pharma names could in focus on the back of regulatory developments in the sector. The US Food and Drugs Administration (US FDA) is set to begin inspection of Lupin's Aurangabad plant from April 17, reports CNBC-TV18 quoting sources. It is likely to be a routine product-linked inspection. The last time the plant was inspected was in January 2016.
Divi's Laboratories could see some relief after the US drug regulator exempted some products that were manufactured at its Visakhapatnam unit from the import alert.
Kotak Mahindra Bank will also be in focus after the Reserve Bank of India issued a certificate of registration to Kotak Infrastructure Debt Fund Limited, subsidiary of the bank, permitting it to commence the business of non-banking financial institution as Infrastructure Debt Fund.
Apollo Tyres may gain strength as it commenced commercial production at Hungary manufacturing unit from April 7 while Sobha may see a correction as its promoter Sobha Menon sold 4.15 percent stake in the company on April 7 via open market sale.
Prakash Industries will also be in action as its Q4 production grew by 16.7 percent to 1.7 lakh tonne and sales increased 19.5 percent to 1.69 lakh tonne (YoY). Its FY17 production climbed 13.4 percent to 6.15 lakh tonne and sales increased 14.9 percent to 6.10 lakh tonne compared to previous year.
Jimeet Modi says the velocity of the market is slowing down with small movements occurring on each successive up days. This is an indication of fatigue in the market, but considering the longer term bull market cycle that Indian market is currently witnessing; these bouts of weakness, slow movements and stock specific movements shall continue to play out.
He suggests short term traders should trail their long bets at 9150 and stay away from the market if it falls further. However, major support continues to be 9000 in Nifty, he feels.
Nagaraj Shetti of HDFC Securities says the present decline could continue for next week, but this correction is unlikely to damage the underlying broader uptrend of the market.
The next lower supports to be watched is around 9120-9100 levels by next week, where one may expect emergence of buying interest from the lows, he feels.
On Monday, Vijay Singhania says if the Nifty sustains above 9,180 level then traders could expect positive move in the Nifty towards 9240 followed by 9280 level. If Nifty trades below 9,180 level then traders may see down move, which could take Nifty towards 9,125 level followed by 9,075 level.
However, 9,300 will be the psychological resistance zone post which he expects fresh upside move towards 9380-9400 levels, he says.
Foreign institutional investors (FIIs) purchased equities worth USD 1.2 billion in cash segment during the week. Domestic institutional investors too remained net buyers with purchases over USD 421 million.
Market experts feel that the trend may continue as the strength in the market is likely to stay, aiding such inflows.
FIIs continued to pour money in Emerging markets including India as US interest rate hike sentiment for 2018 took a strong hit amid the Fed balance sheet unwinding discussion in the FOMC minutes. Post this, the yield curve flattened and US 10-Year fell below the key support level of 2.3. This should bode well for EM's as the reflation trade unwind is good news for EM's.
"Indian bond and equity segment will be on the investment radar as the rupee appreciation trend is showing no signs for fatigue and with Dollar Index likely to weaken further, the rupee appreciation trend could continue, making Indian investment more compelling," ICICIdirect says.
The rupee closed at 20-month high of 64.28 against the US dollar on Friday on consistent FII inflows as well as a fall in US dollar after Syria strikes. Till date, the Indian currency has risen nearly 6 percent. If the inflows continue, the momentum in the currency could continue as well.
The Street will also look towards global equity and commodities markets for geopolitical cues after US' missile strikes against Syrian base. Traders could fear that the oil supply may be impacted post the attack, which had already pushed up oil prices on Friday.
On the global front, China will unveil its Consumer Price Index (CPI) data for March 2017 on Wednesday. While US Producer Price Index (PPI) data for March will be unveiled on Thursday and US Core Consumer Price Index (CPI) data for March will be unveiled on Friday.By Sunil Shankar Matkar and Uttaresh Venkateshwaran.