The upcoming week will see earnings season getting kicked off for the June quarter, as heavyweights such as TCS, Infosys and IndusInd Bank announce their results.
In the week ahead, D-Street investors are likely to keep a track of developments on the earnings front along with key macroeconomic data such as CPI inflation and industrial production, among others.
"Next week, volatility is set to surge as we kick start the result season with IndusInd Bank , TCS and Infosys are set to announce its Q1FY19 earnings. Apart from that, consumer price inflation, industrial production and trade balance data will also be released in the coming week. Crude, currency moves and developments between the US and China trade war will also be closely watched. Charts indicate that fresh breakout is likely only if Nifty manages to break above 10,850 mark convincingly while support is at 10,700 levels," Rahul Sharma, Senior R esearch Analyst at Equity99 said in a statement.
On Friday, Sensex erased most of its intraday gains while the Nifty failed to close above its crucial level of 10,800 levels on Friday as investors preferred to book profits at higher levels.
Trading remained muted across most of the Asian markets but bulls manage to gain control on D-Street amid fears of a trade war, but some experts say that the worries were priced in. US tariffs on USD 34 billion worth of Chinese exports took effect on Friday, and concerns of retaliation by Beijing somewhat dampened sentiment across the region.
For the week, the Sensex closed higher by around a percent, while the Nifty, too, was up over half a percent. The Bank Nifty and Midcap index, too, are higher by up to half-a-percent. Bajaj Auto and Maruti Suzuki were the top gainers for the week. Meanwhile, the Nifty's losers are Vedanta and NTPC.
Here are ten factors that the Street will watch out for.
June quarter earnings kicks off
The upcoming week will see the onset of earnings season for the June quarter. Along with some index heavyweights, around 25 BSE companies will be declaring their results for the quarter under review.
The trends from this quarter will be crucial as they will be the first for this financial year, while the last quarter of last year gave healthy indications, barring banks. Financials were dragged by sharp rise in non-performing assets (NPAs), which were declared on the back of a circular by RBI on February 12.
IndusInd, TCS and Infosys to declare earnings
Analysts at Edelweiss expect revenue growth for IT companies to accelerate in the June quarter and an improvement in management commentaries.
“While TCS is expected to lead the pack with 3.1 percent QoQ USD revenue growth, HCL Tech is estimated to grow 2.4 percent QoQ (2.1 percent inorganic) and Infosys 2.3 percent. Wipro and Tech Mahindra are estimated to dip 2 percent each, QoQ ,” the brokerage house said in a report.
The Street will also watch out for domestic economic data. It could take cues from data points such as industrial production for May.
Additionally, a key economic metric, consumer price inflation (CPI) for the month of June will also be announced. This figure has largely been in focus on the back of interest rate trajectory by the central bank.
Apart from likely trade war issues, which have continued to dominate the market, the Street could watch out for data points such as Chinese CPI data, along with inflows through foreign direct investment (FDI).
Additionally, the US will be releasing its fuel production data along with jobs data as well. In Europe, industrial production on MoM and YoY basis will also be declared.
There will be several companies, whose boards will be meeting either to discuss a specific agenda such as dividend issue or will be conducting their annual general meeting (AGM). Companies such as Balkrishna Industries, Bata India, Mindtree, Ceat, Hero MotoCorp, Greenply, Indian Hotels and Kotak Mahindra Bank, among others will have their AGMs. Investors could take a note out of the management commentary from such meetings.
Stocks in news
Trigyn Technologies: The firm has bagged an order from Nashik Municipal Smart City Development.
Tata Steel Production & Sales Figures: Q1FY19 India production stands at 3.17 million tonnes
Fortis Healthcare: The company has released audited financial results with qualifications from auditor Deloitte.
Cadila: Zydus has received tentative approval from USFDA for Deferasirox Tablets for Oral Suspension. It is used to treat high levels of iron in the body.
Cyient: The company allotted 26,780 shares to its associates under the ASOP scheme.
Emami: The company will be conducting its annual general meeting on August 1, 2018.
ENIL: The company commenced broadcast from new radio station at Siliguri.
DCB Bank: The lender's board will be meeting on July 14, 2018 to discuss financial results.
The index formed a ‘Shooting Star’ kind of pattern on the daily charts and a “hammer’ kind of pattern on the weekly scale.
A 'Shooting Star' pattern is formed when the index comes under selling pressure as traders start booking profits at higher levels.
This pattern is usually formed in an uptrend and is treated as a reversal pattern, but it would require confirmation before we can conclude that the trend will get reversed in near future.
"The near term trend of Nifty continues to be range bound. The upper area of 10,800-850 is going to be a crucial resistance to emerge an upside momentum in Nifty. At the same time, halt in lower levels buying could trigger weakness in the market," HDFC Securities said in a report. A broader range bound movement is likely to continue in Nifty for next week, within a high low range of 10,850-10,650 levels, analysts at the firm wrote in their report.
The week gone by saw the trade war fears between US and China intensifying and any further developments on that front would keep the Street on its feet.
The United States and China exchanged the first salvos in what could become a protracted trade war on Friday, slapping tariffs on USD 34 billion worth of each others’ goods and giving no sign of willingness to start talks aimed at a reaching a truce.
Duties on a range of Chinese goods imported into the United States took effect on Friday and were immediately countered by measures from China, with Beijing accusing the United States of triggering the “largest-scale trade war”.
The escalating fight between the world’s two biggest economies meant that it could “take economic and political pain to get these two parties to the (negotiating) table”, said Scott Kennedy, head of China studies at the Center for Strategic and International Studies in Washington.
President Donald Trump is already threatening additional rounds of tariffs, possibly targeting more than $500 billion worth of Chinese goods - roughly the total amount of US imports from China last year.
The market will closely watch the movement on rupee front, which closed at a fresh weaker point. The Indian currency posted a second consecutive weekly decline against the dollar. It ended at 68.87/dollar against Thursday's close of 68.95/dollar.
So far, in July 2018, FIIs have remained net sellers to the tune of Rs 2,450 crore, while DIIs have continued to arrest the fall in the market with purchases around Rs 2,073 crore.In 2018 so far, FIIs have largely remained net sellers for 4 out of six months that have seen complete trade. For the month of June, FIIs sold shares worth Rs 10,249 crore, while DIIs purchased Rs 14,146 crore worth of shares.