Experts largely see the stock specific action on earnings and also expect the consolidation to continue in the coming week.
Bears managed to halt the bulls in their tracks at Dalal Street this week, with the market taking a breather following a 7 percent rise over the past five weeks.
The Nifty lost 0.7 percent and the Sensex fell 0.2 percent amid volatility after hitting a three-month high in the week gone by. The broader markets underperformed frontliners, with the Nifty Midcap index falling 2 percent and BSE Smallcap declining over a percent.
Investors turned cautious and preferred to book some profits as they digest the ongoing company earnings announcements and ahead of an important political event: Karnataka elections, which will be held on May 12 (the result will be declared May 15). Global markets also stayed cautious through the week, ending mostly in the red.
Experts said that the upcoming assembly election, which could set the tone for the general election about a year ahead, could continue to keep markets volatile.
They added that the market could witness-stock specific action based on earnings and said the market could break out on either side only after exit polls will be announced by media houses and survey agencies after voting on May 12.
“We expect some amount of consolidation at current levels with individual sectors and stock rotation being in focus depending on further news flow emanating from quarterly results during the month,” Vikas Jain, Senior Research Analyst, Reliance Securities said.
Teena Virmani, Vice President – Research at Kotak Securities, said the volatility is likely to remain in next week. In the near term, markets would continue to focus on the outcome of assembly polls in Karnataka along with oil prices, yield movement and rupee depreciation, she said.
By May 12, US President Donald Trump will decide whether to restore US sanctions on Tehran. If imposed, it would likely result in a reduction of Iran’s oil exports, thereby further lifting Brent prices, she added.
Sentiments in the global market will also dictate trend on the bourses next week, Rahul Sharma, Senior Research Analyst, Equity99, said.
Here are 10 key factors that will keep traders busy next week:
Earnings
As we are in the middle of March quarter earnings season, about 600 companies (as per latest data available on the BSE) are going to announce their quarterly numbers in current month. Some companies have not announced their results dates yet, so the list will increase as we move towards last fortnight of this month.
In the coming week, more than 200 companies will release their January-March quarter earnings reports, which includes ICICI Bank, Eicher Motors, Asian Paints, Titan Company, Zee Entertainment, Exide Industries, ABB India, Goderj Consumer Products, Jubilant Foodworks, Arvind, Tata Chemicals, Tata Global, Jindal Steel & Power, Parag Milk Foods, Adani Enterprises and Apollo Tyres.
Apart from ICICI Bank, another eight banks will also announce their results next week, which are Allahabad Bank, Canara Bank, Dena Bank, Vijaya Bank, Federal Bank, Indian Bank, Oriental Bank of Commerce and UCO Bank.
ICICI Bank
Country’s larget private sector lender ICICI Bank will declare its March quarter earnings on Monday. The key thing to watch out for by the Street would be its asset quality performance and provisions and their impact on profitability. Investors will also keenly watch MD & CEO, Chanda Kochhar’s view on the bank performance going forward.
The bank is likely to post a sharp decline of about 52.7 percent YoY in net profit for the fourth quarter ending March 2018 at Rs 955.7 crore while net interest income is also projected to be marginally lower by about two percent to Rs 5,832 crore YoY, according to Reuters Poll estimates.
The profits are likely to be hit because of substantially high provisions for bad loans. The provisions are expected to jump by 146 percent year-on-year to Rs 7131 crore, which would be doubled from the December quarter.
On the other hand, non-interest income is estimated to be more than doubled to Rs 6,711 crore, up 122 percent from Rs 3,017 crore in the year ago quarter. The sharp rise is likely from the proceeds of stake sale in its subsidiary ICICI Securities through the IPO or the initial public offering.
Karnataka Elections
The most important event to watch out for towards the next weekend would be the Karnataka elections that will be held on May 12 in all 224 constituencies of the state assembly followed by counting on May 15, which will keep market volatile.
Karnataka elections results are not only important for market but also for General Elections 2019 to some extent as it will give some direction to the market in short term and some hint about political stability.
The market on May 14 will first react to the exit polls announced immediately after the voting on May 12 and then will look for results on May 15.
Macro Data
On the macro front, the government will release the industrial output data for month of March on Friday after market hours.
Industrial output, measured by the index of industrial production (IIP), continued to grow more than 7 percent for fourth consecutive month in February at 7.1 percent against 7.4 percent growth in January.
Rupee
The Indian rupee is marching towards 67 against the US dollar, falling for the fourth consecutive week on strengthening US dollar, rising oil prices and worries over widening trade deficit.
It closed 21 paise lower at 66.87 in the week gone by. Rising demand for US dollar on hope that Federal Reseve will continue raising interest rates also drove the rupee lower. The rising rupee could put inflationary pressure on the economy.
According to reports, Indian rupee has been among the worst performing currencies in the emerging market pack this year and has lost over 4.5 percent against the US dollar.
ADB Chief Economist Yasuyuki Sawada on Friday said India need not worry much about currency fluctuation at the moment as the country has good accumulation of foreign exchange reserves, but a depreciating rupee could put inflationary pressure on the economy.
He said the Asian Development Bank (ADB) does not foresee a sharp increase in oil prices which has touched USD 75 a barrel recently.
Oil prices increased sharply on Friday as global supplies remained tight and the market awaited news from Washington on possible new US sanctions against Iran, reports CNBC.
Brent crude oil futures were at USD 74.90 per barrel, up 1.7 percent on Friday. It already hit a three-and-half-year closing high of USD 75.17 on Monday while US crude futures clsoed up 1.9 percent at USD 69.72 per barrel, the highest level since November 26, 2014.
Technical Outlook and F&O
Experts largely feel the market looks week, especially after breaking key important levels of 10,650 and 10,620.
The Nifty50 which closed in red for the third consecutive day in a row on Friday could face rough waters in the coming week as support levels for the markets are shifting lower which does not augur well for the bulls, Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
The Nifty lost 0.7 percent in the passing week, after rising 7 percent for previous five consective weeks.
“Failing to breakout critical resistance around 10,780 resulted in retracement towards ending nearer the weekly low of 10,602. Ending the week below 10,640 mark brightens the possibility of further correction towards and 10,520. Midway critical support is placed around 10,580.” Stewart and Mackertich said.
Further, as the weekly chart pattern suggests, Nifty broader trading range for the coming week is expected to be 10,520 to 10,780, it added.
According to Sumit Bilgaiyan, Founder of Equity99 said now, one can look at 10,550 levels on a downside and 10,680-10,780 levels on upside.
Meanwhile, options data indicated that the Nifty could be in the broader range of 10,500 to 10,800 in the coming week, experts said.
On the options front, maximum Put open interest (OI) is placed at 10,500 followed by 10,400 strikes while maximum Call OI is placed at 11,000 followed by 10,800 strikes. Fresh Put writing was seen at 10,400 and 10,500 strikes while Call writing was seen at 10,700 and 10,800 strikes.
“Options activity remains concentrated at 10500 Put and 10800 Call where both these strikes are seeing addition of almost 10 lakh shares each during the week. This suggests a broad Nifty range of 10500-10800 for the Nifty in coming sessions,” ICICI Securities said.
IPO
Indostar Capital Finance will open its initial public offering for subscription on May 9 with a public issue which comprises of fresh issue aggregating up to Rs 700 crore and an offer for sale of up to 2 crore equity shares. The price band for the offer is fixed at Rs 570-572 per share.
The company aims to raise Rs 1,844 crore at higher end of price band through the issue which will close on May 11.
It intends to primarily utilise the net proceeds of the fresh issue for augmenting its capital base to meet future capital requirements.
Established in 2009, Indostar Capital Finance is a leading NBFC lending to mid-to-large sized corporates in manufacturing, services and infrastructure industries and real estate developers of residential and commercial building projects. The company has recently ventured into other segments such as housing finance and vehicle finance.
Corporate Action
Stocks in Focus
Wockhardt Q4: Loss at Rs 154 crore versus loss of Rs 174 crore; revenue up 17.6 percent at Rs 1,018 crore versus Rs 865.5 crore (YoY).
R Systems International Q4: Profit falls to Rs 3.85 crore from Rs 7.32 crore, revenue from operations decliend marginally to Rs 152.2 crore from Rs 155.5 crore (YoY).
Voith Paper Fabrics India Q4: Profit dips to Rs 4.5 crore versus Rs 5.2 crore; revenue from operations falls to Rs 23.8 crore from Rs 24.5 crore (YoY).
SQS India BFSI Q4: Profit after tax rises to Rs 10.4 crore from Rs 5.5 crore, aided by a forex gain of Rs 2.9 crore; operating revenue jumps to Rs 75.6 crore versus Rs 70.4 crore (YoY).
Teesta Agro Industries Q4: Profit falls to Rs 5 lakh from Rs 38 lakh; revenue from operations jumps to Rs 23.66 crore from Rs 14.70 crore (YoY).
BASF India Q4: Profit jumps to Rs 66 crore versus Rs 42.55 crore; revenue from operations slips to Rs 1,343.56 crore versus Rs 1,392.62 crore (YoY).
Indo Count Industries Q4: Profit dips to Rs 26.79 crore versus Rs 48.80 crore; revenue from operations falls to Rs 405.94 crore versus Rs 467.51 crore (YoY).
Nitta Gelatin India Q4: Profit jumps to Rs 5.48 crore versus Rs 4.01 crore; revenue from operations rises to Rs 88.64 crore versus Rs 78.39 crore (YoY).
Great Eastern Shipping Q4: Loss widens to Rs 418.2 crore versus Rs 34.16 crore; revenue from operations increases to Rs 768.90 crore versus Rs 746.52 crore (YoY).
LS Industries Q4: Net profit at Rs 26.14 lakh versus loss of Rs 9.18 lakh; revenue from operations jumps to Rs 4.2 crore from Rs 1.9 crore (YoY).
Triton Valves Q4: Profit falls to Rs 1.23 crore versus Rs 2.48 crore; revenue from operations increases to Rs 54.9 crore versus Rs 48.7 crore (YoY).
Nocil Q4: Profit rises to Rs 50.95 crore versus Rs 20.91 crore; revenue from operations jumps to Rs 275.87 crore versus Rs 209.78 crore (YoY).
Indbank Merchant Banking Services Q4: Loss at Rs 2.5 crore versus profit at Rs 1.07 crore; revenue from operations rises to Rs 2.7 crore versus Rs 2.35 crore (YoY).
Lloyds Steels Industries Q4: Profit jumps to Rs 99.84 crore from Rs 12.03 crore; revenue from operations rises to Rs 63.4 crore versus Rs 39.4 crore (YoY).
Elecon Engineering Q4: Profit rises to Rs 53.38 crore versus Rs 30.04 crore; revenue from operations falls to Rs 437.14 crore from Rs 446.64 crore (YoY).
Kaya Q4: Loss at Rs 7.8 crore versus loss of Rs 4.52 crore; revenue from operations dips to Rs 97.38 crore versus Rs 114.4 crore (YoY).
Fortis Healthcare appointed Arpwood Capital Private Limited as financial advisor to the board of directors of the company to provide its independent opinion on (a) the offers received or to be received from bidders for a potential significant equity investment and/or acquisition or restructuring of its assets, and (b) on the appropriateness of the process put into place for dealing with the said offers.
Indiabulls Ventures: To capitalise and fund IVL Finance Limited and Indiabulls Asset Reconstruction Company, subsidiaries of the company, for meeting their business requirements and to support the future growth of their businesses and to further augment the long-term financial resources of the company, Indiabulls Ventures’ board of directors approved the preferential offer and issue of upto 4,58,39,888 equity shares at an issue price of Rs 450 per share, for cash consideration aggregating to approximately Rs 2,063 crore, to certain foreign investors.
Thomas Cook India: CRISIL revised its outlook of the credit rating assigned to long-term instruments of the company amounting to Rs 200 crore.
Larsen & Toubro: Subsidiary company, L&T Infrastructure Development Projects (L&TIDPL) transferred its stake in five subsidiary companies to Indinfravit Trust through the infrastructure investment trust (InvIT) route on May 4, 2018. Accordingly, these companies cease to be subsidiary companies of the company.
Bank of Baroda keeps marginal cost of funds based lending rate (MCLR) at existing level across the tenors.
Cadila Healthcare: Zydus receives final approval for Succinylcholine Chloride injection USP and tentative approval for Plerixafor injection from the USFDA.
Smartlink Holdings: Board of directors of Smartlink Holdings Limited (formerly known as Smartlink Network Systems) has approved the buyback of 56 lakh equity shares of Rs 2 at a price of Rs 120 per share under tender offer route.
Bodal Chemicals: Company had started the process for acquisition of land aggregating to about 4.82 lakh square metres from the Gujarat Industrial Development Corporation (GIDC) authority, Ankleshwar for future expansion and new projects.
Punjab National Bank: Hiroo Mirchandani, Director under shareholder category, ceased to be director on the board of the bank on completion of her tenure.
PNC Infratech: CARE has assigned credit rating on the long term bank facilities of subsidiary, PNC Khajuraho Highways Private Limited to A-; stable.
Benares Hotels: Ashwani Anand has resigned as the chief executive officer (CEO) of the company.
Pankaj Polymers: Board of directors approved sale of assets of the company located at Nagpur Unit.
Manomay Tex India: Commercial production at Denim Plant situated at Gangrar (Raj) successfully commenced.
Otco International: To consider splitting up of face value of equity shares of the company from of Rs 10 each.
A Infrastructure: Board has given consent for execution of a memorandum of understanding (MOU) for purchase of land, building and plant & machinery used for distillery owned by J R Organics Limited for Rs 28.50 crore.
James Hotels: Committee of Creditors decided that in the absence of any viable resolution plan, the company will be liquidated in terms ofthe provisions ofthe Insolvency and Bankruptcy Code.
Global Cues
On coming Monday, Indian equities may initially react to US jobs data, which missed analyst expectations. The US government on Friday reported that the economy added 1,64,000 jobs in April, lower than the 1,95,000 expected by economists polled by Reuters while while the unemployment rate fell to 3.9 percent in April, an 18-year low.
On Monday, the Bank of Japan monetary policy meeting minutes will be released. The BoJ had kept its key short-term interest rate unchanged at -0.1 percent in its April meeting, which was on expected lines.
China’s balance of trade data for April will be announced on Tuesday, inflation for April on Thursday, outstanding loan growth & vehicle sales for April on Friday.
The Bank of England will announce its interest rate decision on Thursday while US’ core inflation data for April, continuing jobless claims, Real Earnings for April and Michigan inflation expectations for May will be unveiled on Thursday.
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