The market continued its run for the fourth consecutive week despite volatility in global stocks and crude hit multi-year highs, largely backed by hope of continuity in earnings revival.
TCS' healthy Q4 earnings & FY19 outlook, normal monsoon forecast by meteorological agencies and consistent inflow from domestic institutional investors also boosted sentiment in the passing week.
The 30-share BSE Sensex gained 0.65 percent to end at 34,415.58 and the 50-share NSE Nifty rose 0.80 percent to 10,564.05.
The broader markets outperformed frontliners as the Nifty Midcap and BSE Smallcap indices rallied a percent each. FMCG, Metal and IT indices were biggest gainers among sectoral indices, rising 4-5 percent while PSU Bank lost the maximum, falling nearly 5 percent.
After nearly 6 percent rally in four straight weeks, the market is largely expected to be in a consolidation mode in the coming week and even the expiry of April derivative contracts would add to that volatility, experts said.
Investors will continue monitoring earnings performance, and crude oil prices and rupee movement going ahead, followed by Karnataka elections next month.
"Markets will remain volatile during the next week with impending derivatives expiry and a number of companies’ annual results," Vikas Jain, Senior Research Analyst, Reliance Securities said.
Gaurav Jain, Director, Hem Securities said apart from on-going corporate earning, markets would start factoring the sharp rise in crude oil prices and weak Indian Rupee and its impact on the economy.
Brent crude oil futures crossed USD 74 per barrel mark last week, the highest level since late 2014.
Jain further said another crucial event coming up next month is the crucial Karnataka assembly elections, any change in political equations would affect market sentiments as Chhattisgarh, Rajasthan and Madhya Pradesh go for election thereafter. "However, even if earnings for the March quarter improve and the market rallies, volatility will return with various state election results and the monsoons are other key drivers."
On Monday, first markets will initially respond to HDFC Bank earning announced on Saturday.
Here is the list of 10 key factors that will keep traders busy next week:-
Earnings always play key role to decide the market direction apart from other macro & global factors as so far the stability and recovery in benchmark indices from 2018 lows is largely on hope of earnings revival going ahead coupled with domestic inflow support.
March quarter earnings season kicked off on a mixed note as Infosys disappointed the Street with its FY19 EBIT margin guidance and IndusInd Bank reported higher FY17 divergence, but TCS stolen the show by reporting healthy Q4 performance and FY19 outlook.
Around 120 companies are going to release their earnings report in the coming week, including big names like Reliance Industries, Bharti Airtel, Maruti Suzuki, Axis Bank, Yes Bank, Wipro and UltraTech Cement.
"Focus will will remain management commentary and guidance for year ahead rather then earnings which in turn will fund-managers re-balancing their portfolio accordingly," Rahul Sharma, Senior Research Analyst, Equity99 said.
The most important company to look at next week is Reliance Industries, the oil-retail-to-telecom major, which will declare Q4FY18 earnings on coming Friday.
Apart from petrochemical and refinery businesses, telecom is the major component to look for in the January-March quarter earnings of the Mukesh Ambani Group company.
Reliance Jio had reported its first ever profit at Rs 504 crore in December quarter 2017 against loss of Rs 271 crore in previous quarter while there was strong petrochemical business performance during the quarter.
Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
The country's largest telecom operator will release its March quarter earnings on Tuesday. Analysts largely expect the company to report weak set of earnings due to pricing pressure.
"Q4FY18 is likely to be another weak quarter for Bharti. Tariff cuts in January-18, interconnect usage charges (IUC) rate cut on international incoming calls from 53p to 30p from 1st February, 2018 and average revenue per user (ARPU) down trading on account of increasing proportion of bundled plans subscribers to exert pressure on revenues of incumbents," HDFC Securities said.
It expects company's India wireless business revenue to decline 5.5 percent QoQ and EBITDA 13.5 percent owing to IUC rate cuts, tariff cuts in Jan-18 and ARPU downgrade owing to increased adoption of bundled plans. Outlook on capex and ARPU trajectory would be key investor focus, it said.
Elara Capital expects further ARPU decline due to 1) further downtrading among the incumbents’ subscriber base and 2) lower termination charges for ILD termination starting February 1st 2018.
"We expect Bharti Airtel to report ARPU of Rs 115.7 – down 7.6 percent QoQ and 27.8 percent YoY. However, we expect India wireless revenue decline to be lower than ARPU decline due to new subscriber addition and expect Bharti’s India wireless revenue to be down only 4.8 percent QoQ as subscriber base reaches 29.98 crore," Elara said.
Investors always like Maruti Suzuki (MSIL), the largest car maker in the country, though it is not a heavyweight stock. Most analysts expect the company to report double digit performance on all parameters led by strong volume growth in Q4 following recovery in rural demand, government spending on infrastructure and new launches.
"MSIL posted a strong volume growth of around 11 percent YoY which is expected to lead to the revenue growth of 14 percent YoY in Q4FY18. We expect the margins to improve by around 130bps over the last year due to reduction in other expenses as a result of ramping up of Gujarat plant," Equirus said, adding key things to look for would be margins and volume outlook.
HDFC Securities continued to like MSIL's unique moats, although valuation leaves little room for an upside.
"We expect 14 percent YoY growth in topline, aided by 11.4 percent volume and 3 percent net ASP improvement owing to richer product mix (higher share of Baleno and Brezza, with incremental production from the Gujarat Plant). EBITDA margin to expand by 187bps YoY to 15.8 percent led by operating leverage, but flat sequentially owing to Gujarat plant ramp up," it said.
Crude Oil and Rupee, Bond Yields
Apart from earnings, the movement in crude oil prices and its impact on rupee would also be a key thing to watch out for in the coming week.
Brent crude, the primary benchmark for international oil prices, increased from USD 72.58 a barrel to USD 74.06 a barrel during the last week, an increase of 2 percent WoW due to geo-political tensions. It is at highest level since late 2014.
Crude oil is the most important part of country's import bill as India imports more than 80 percent of its oil requirement. Some analysts feel the crude level up to USD 80 a barrel is not a worrisome for India.
"Rising oil prices also pose a threat to the fiscal and current account deficit estimates of the government. Oil price direction will also be determined by OPEC output cuts and US decision on re-introduction of sanctions on Iran by May 12," Teena Virmani, Vice President – Research at Kotak Securities said.
"Crude also hits the currency as a weak Indian Rupee raises the cost of importing crude oil," Gaurav Jain, Director, Hem Securities said.
Last week, the Indian rupee hit a 13-month low of 66.10 against the US dollar, after the minutes of the monetary policy panel meeting suggested that they were likely to take a more hawkish tone starting as early as June.
Accordind to Teena Virmani, hardening of yields – both globally and domestically may have a negative impact on markets. "Yields have moved up recently after RBI released the minutes of April monetary policy meeting stating upside risks to inflation which may come from MSP increases, crude price increase and resulting fiscal slippage."
The Nifty50 tried hard to reclaim 10,600 level in the passing week, but failed to hit that level due to selling pressure at higher levels.
It could be the next immediate resistance for the index followed by 10,660 while on the downside, 10,500 is the immediate support level followed by around 10,460.
"Nifty has once again formed a Hanging-Man Candle stick pattern on the daily chart, which is another sign of uncertainty. Going forward, a fresh breakout is likely only if Nifty manages to break and close above the 10,610-10,630 zone, while 10,480 will act as a strong support for Nifty," Rahul Sharma, Senior Research Analyst, Equity99 said.
Anita Gandhi, Whole Time Director at Arihant Capital Markets said since prices have entered the supply zone of 10,468 to 10,702 there is a probability of a consolidation/correction from current level cannot be ruled out. Stock specific activity is likely to continue going forward.
"Any decline below 10,450 in Nifty will trigger a sharp profit booking in high beta sectors and stocks. As for the week, support for Nifty is placed at around 10,460 and then at 10,390 levels, while resistance is observed at 10,640 and then at 10,700 levels," Vikas Jain, Senior Research Analyst, Reliance Securities said.
The futures & options contracts for the month of April are going to expire on coming Thursday and positions will be rolled over to next month.
As the Nifty futures ended near 10,600 level and we are approaching towards April series expiry, the market is building support around 10,500-10,400 level. Highest put concentration has shifted from 10,300 to 10,500 levels, which signifies strength in the market.
From derivative data the maximum call open interest concentrations at 10,700 calls indicating towards strong resistance for the Nifty moving forward while and 10,500 followed by 10,400 put strike hold with the maximum open interest which should act as major support in expiry week, SMC Global Securities said.
The PCR for the passing week closed up at 1.45 as compared from last week which indicates more put writing. India VIX fell by 5.91 percent to 12.93, which suggests limited downside and a consolidative move in the market.
In coming week, the research house expects the market to trade in the range of 10,400 to 10,700 with bullish undertone.
Stocks in Focus
HDFC Bank's Q4FY18 profit grew by 20.3 percent YoY to Rs 4,799.3 crore and net interest income was up 17.7 percent to Rs 10,657.7 crore; the board of directors recommended a dividend of Rs 13 per equity share of Rs 2 each.
Axis Bank said board commenced succession process to appoint new MD & CEO, appointed Egon Zehnder Advisory firm to evaluate candidates and to conduct succession process.
Indiabulls Housing Finance's Q4 consolidated net profit grew by 22.6 percent YoY to Rs 1,030.4 crore, revenue 25.9 percent to Rs 3,689.7 crore and net interest income rose 22.1 percent to Rs 1,661 crore.
Indiabulls Housing Finance has fixed May 3 as the record date for the purpose of payment of interim dividend of Rs 10 per share
Sasken Communications' Q4FY18 profit increased 27.5 percent to Rs 26 crore, revenue declined 2.4 percent to Rs 128.7 crore, operating profit rose 31.4 percent to Rs 21.5 crore and margin improved 430 basis points to 16.7 percent QoQ.
CIMMCO: India Ratings & Research has revised the long-term rating for the company to 'A+' from 'AA-'.
Titagarh Wagons: India Ratings & Research has revised the Long-Term Rating for the Company to 'A+' from 'AA-'.
Aro Granite Industries approved an expansion plan. The company is planning to set up a plant at Jaipur, Rajasthan to enhance its installed capacity by 1,53,000 square meters of granite slabs with an approximate outlay of Rs 55-60 crore.
Dilip Buildcon has incorporated three new special purpose vehicles companies for 3 hybrid annuity projects awarded by the National Highways Authority of India valued at Rs 2,948.1 crore.
Megri Soft: MS Shoes East Limited (now known as Tomorrowland Technologies Exports Limited) has instituted a suit against the company for execution of ex-parte decree for an amount of Rs 85,16,928 along with interest at 18 percent per annum till date. The company is planning to take suitable legal action in this regard.
Shiva Cement's Q4FY18 profit at Rs 2.41 cr against loss of Rs 7.34 crore and revenue from operations at Rs 8.91 crore against Rs 4.4 crore YoY.
Adani Enterprises and Prakash Asphaltings and Toll Highways (India) Limited have incorporated a joint venture company Bilaspur Pathrapali Road Private Limited (SPRPL) in the ratio of 74:26.
Phoenix Mills: Island Star Mall Developers (ISMDPL), the strategic investment alliance owned by The Phoenix Mills Ltd. (PML) and Canada Pension Plan Investment Board (CPPIB), acquired a prime land parcel in Hebbal, Bengaluru for a total consideration of Rs 650 crore; the site has a development potential of approximately 1.81 million square feet.
Kitex Garments to consider proposals for further investments on April 25
Satin Creditcare Network: A meeting of working committee of the board of director is scheduled to be held on April 25 for the issuance of non-convertible debentures upto the amount of Rs 97 crore through private placement.
Himalaya Food International launches distribution hub for North Delhi at Aadarsh Nagar, New Delhi with S N Enterprises as channel partner.
Capital India Finance: Right issue committee of Capital India Finance (formerly known as Bhilwara Tex-Fin Limited) will be held on April 25 to consider and approve matter(s) related to proposed issue of equity shares of the company.
Bajaj Healthcare: There was a fire accident in one of the its plant situated at factory Unit II Savali- Karachia Road, Vadodara on April 21; there has been no loss or substantial injury to human life.
Idea Cellular board to consider financial results on April 28
Aspira Pathlab & Diagnostics: Board of Directors approved to issue upto 30 lakh equity shares at issue price of Rs 17 per share to promoter & strategic investor not forming part of promoter group on a preferential basis for an aggregate consideration of upto Rs 5.1 crore.
Elpro International approved the scheme of amalgamation for amalgamation of Elpro Estates Limited, wholly owned subsidiary, with the company with effect from April 1, 2018.
KP Energy incorporated project specific special purpose vehicle (SPV) for sharing rights of 1200MW transmission line infrastructure to be constructed under BoP contracts for wind power projects at Kutch, Gujarat.
HEG: India Ratings and Research has upgraded company long-term issuer rating to 'AA' from 'A+' with stable outlook.
Mahalaxmi Rubtech: Board of directors, on April 30, to consider and approve allotment of 1,85,0000 equity shares upon conversion of warrants, issued to promoters and promoter group of the company at issue price of Rs 45 per warrant on preferential basis.
Spring Fields lntraventures to issue 1,28,89,500 equity shares to the promoters and the others on preferential basis at an price of Rs 10 per share.
BC Power proposed to shareholders of the company for their approval for sub-division of one equity share of face value of Rs 10 each into five equity shares of Rs 2 each.
MMTC has fixed May 4 as the record date for issue of bonus shares of the company in the ratio of 1:2.
Starlog Enterprises: STUP Consultants Private Limited, acting as Independent Engineers have issued a completion certificate for Dakshin Bharat Gateway Terminal Private Limited, a subsidiary of the company, for the project of conversion of the 8th Berth as a Container Terminal at V O Chidambarnar Port and is declared fit for entry into commercial operation.
L&T is looking at restructuring o its electrical and automation business
Unichem said USFDA completes Ghaziabad plant inspection, no observations issued
NHPC targets more than 5 percent growth in power generation in FY19
SJVN aims to generate 9.2 BUs electricity with Rs 900 crore capex this fiscal
PNB intensifies ‘Gandhigiri’ to recover NPAs, targets Rs 150 crore per month
NCLT extends time frame for Binani Cement resolution: ET
Sebi slaps over Rs 1 crore fine on Suzlon Energy for violating listing agreement norms.
Japan's Manufacturing PMI for April, European Manufacturing & Services PMI for April, US Manufacturing & Services PMI for April and US Existing Home Sales data for March will be announced on Monday.
BOJ Core CPI, US CB Consumer Confidence and US New Home Sales data for March will be announced on Tuesday.
US Crude Oil Inventories data will be released on Wednesday while ECB interest rate decision, US Durable Goods Orders for March and US Unemployment Claims data will be announced on Thursday.
Japanese Industrial Production for March, BOJ Monetary Policy, Japanese Housing Starts for March and US GDP data for Q1CY18 will be announced on Friday.