Trust Industries | market outlook: Q3 earnings, Covid 3rd wave, China GDP among key factors guiding market this week

New Delhi: The domestic stock market was in good spirits last week on favorable global signals, strong data from IT heavyweights and high expectations from India Inc ahead of earnings season.

Both benchmarks – BSE Sensex and Nifty50 – climbed more than 2% each during the week, while second-tier stocks performed in line with their major counterparts. Rotating buying across all sectors supported sentiment.

Over the coming week, earnings for the December quarter are expected to gain momentum with many heavyweights lining up to report earnings. The country’s Covid-19 situation and China’s GDP figures will also be closely watched.

Among other events and data, expectations regarding the Union’s budget have started to trigger notable movements at all levels. Global indices and updates on the Covid situation are also on the market radar, according to Ajit Mishra, VP of Research, Religare Broking

“We recommend maintaining focus on sectors/themes that are doing well and using an intermediate correction to create long positions. Although participation is wide, metals, IT, real estate and pharmaceuticals could eclipse the coming week,” he added.

Here are the key factors that could guide the market this week:

India Inc revenue

With the official start of earnings season, third quarter results for a number of index constituents and other companies are in the works this week.

Reliance Industries, JSW Steel, Ciment Ultratech, Bajaj Finance, Baja Auto, Hindustan Unilever, Asian Paints, Bajaj Finserv, Havells India, Biocon, ICICI Prudential Life Insurance Company, Tata Elxsi, Trident, HDFC, Sonata Software, Angel One, JSW Energy and others will announce their third quarter earnings.

Covid-19 Third Wave

India entered the third wave of the pandemic early in the new year, with cases increasing at a rapid rate, thanks to the contiguous variant of Omicron. The daily case tally is progressing towards 3 lakh a day, though hospitalization remains low. However, the death toll is accelerating, which is quite worrying.

States and cities across the country have begun to impose new restrictions on movement, which may scare traders away. They will keep an eye on further developments on this front. In addition, the growing number of curfew-bound areas on weekends is hampering economic activities in various parts of the country.

China’s GDP figures

China will report its gross domestic product for the period October-December 2021 on Monday. The world’s second-largest economy is expected to post its weakest economic growth in more than a year due to the cost of the worsening collapse of the real estate market and disruption caused by virus outbreaks.

December data for industrial production, retail sales and fixed asset investment, due the same day, are also expected to be weaker. China’s economy was initially expected to grow 6 percent in 2021, in line with the government’s annual growth target.

tapered tails

US inflation hit its highest level in four decades. The consumer price index (CPI) inflation rate remained elevated in December, adding to inflationary concerns. Although the number was below market expectations, it was the highest in more than six months. This clearly suggests that the Fed’s hawkish stance will remain firm.

Pre-budget move

The pre-budget movement has started in many pockets and is also expected to continue over the coming week. The market is also looking for support measures for sectors such as housing, autos and auto accessories, measures linked to the LIP in several sectors.

The upcoming Union budget could see Finance Minister Nirmala Sitharaman announce plans to ignite India’s investment cycle while laying out the roadmap for fiscal consolidation. Sitharaman will table its fourth budget on February 1.

First IPO of 2022

The primary market is likely to officially launch 2022 as the first issue of the new calendar – AGS Transact Technologies – opens for subscription on Wednesday January 19. The company will raise Rs 680 crore by selling shares in the range of Rs 166-175 a piece.

Technical outlook

The Nifty 50 index closed on a bullish note for the fourth consecutive week, reinforcing the end of the 3-month corrective phase. Nifty Energy and Realty remained the biggest gainers, as almost all sector indexes finished in the green, said Yesha Shah, head of equity research, Samco Securities.

“While the resistance at 17,950 has been definitively broken, the benchmark now appears to be targeting its previous all-time high. We suggest traders maintain a bullish bias in the market. That said, minor declines cannot be ruled out. in the future and dips around immediate support levels can be used as buying opportunities,” she added.

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