You are using an older browser version. Please use a supported version for the best MSN experience.

Markets may extend rally, all eyes on SBI, HUL, Tata Steel earnings

LiveMint logoLiveMint 15-05-2017 Nasrin Sultana

Mumbai: The markets are expected to extend the rally on optimism, while March quarter results of few major companies and macroeconomic data released on Friday are likely to be closely watched this week.

Teena Virmani, vice-president, (private client group) research at Kotak Securities, said, “In the coming week, markets movement will largely be dependent on corporate results, IIP (Index of Industrial Production) and inflation data as well as further updates on monsoon.”

Major companies that will announce March quarter earnings this week are State Bank of India, Tata Steel, Hindustan Unilever, Punjab National Bank, Bajaj Auto, Bank of Baroda, Tata Power, Colgate, Bata, Tata Steel and Grasim.

“The markets are currently trading at fair valuations and hence sustainability of earnings going forward is very important at current levels. Any disappointment on the earnings front and the outlook could result in profit booking. Globally, escalating tension between the US and North Korea, tax reform measures from US President as well as oil prices will be important events to watch out for,” Virmani said.

According to Vinod Nair, head of research, Geojit Financial Services, the markets are very eagerly waiting to understand the trajectory of earnings outlook for FY18. “Liquidity is high supported by aggressive investment through mutual funds while foreign institutional investors are also turning buyers in the market due to the feel of missed opportunity. In the near-term, we feel that the next three weeks will be very important since a large set of results are stated to report,” he said.

The markets will also react to macroeconomic data released last Friday with changes in new base-year series for Wholesale Price Index (WPI) inflation and IIP.

Newly released WPI inflation with 2011-12 base year was sharply lower to 3.9% in April from 5.3% in March. The new IIP series recorded a higher-than-expected growth of 2.7% in March compared to 1.9% in February.

According to CARE Ratings analysis, industry output growth will be maintained in the range of 5-6% for FY18, though a clearer picture will emerge only when data for the new year becomes available.

CPI (Consumer Price Index) inflation slipped to a record low of 2.99% in April compared to 3.89% in March led largely by favourable base effect and slower pace in core inflation. “CPI inflation has come much lower at 3% for the month, which is a positive sign. However, we believe that the RBI (Reserve Bank of India) will still wait for a while before taking action on interest rates based on goods and services tax (GST) impact, monsoon progress, Pay Commission impact and core CPI data,” said CARE Ratings.

In the primary markets, PSP Projects Ltd, an Ahmedabad-based construction company, will launch its initial public offering on 17 May. With a price band of Rs205-210 per share, the company is planning to raise Rs211.6 crore via its IPO.

India Grid Trust, an infrastructure investment trust (InvIT) sponsored by Sterlite Power Grid Ventures Ltd, will also launch its IPO on 17 May. The company that owns power transmission assets in India has priced it at Rs98-100 apiece.

Jimeet Modi, chief executive officer, SAMCO Securities, said, “The markets are sitting at alleviated optimism, but the domestic liquidity is holding on the market. The extent of over subscription in recent IPOs vindicates such fluidity of the market. Volatility has increased and so has the option premiums. But all these volatility will slowly subside by the end of this month. Markets will continue to have bouts of buying and profit booking situations.”

More From LiveMint

image beaconimage beaconimage beacon