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Markets to be cautious on Q4 results amid geopolitical tension

LiveMint logoLiveMint 17-04-2017 Nasrin Sultana

Mumbai: Investors are expected to be cautious this week as geopolitical tension continues to rise, stirring volatility. The geopolitical instability concerning the relationship of the US with Russia, China and North Korea sparked fears among investors, and global markets reacted negatively.

Adding to global worry is the upcoming French presidential election as National Front candidate Marine Le Pen’s win may lead to France leaving the euro zone. The first round of vote is on 23 April, and the second on 7 May.

However, analysts said that Indian markets are unlikely to be affected until it turns out to be a bigger crisis or if North Korea strikes a missile, though March quarter earnings are expected to keep investors on their toes.

Indian markets have wiped off all gains made in April with foreign flows turning negative. Foreign institutional investors (FIIs) have sold $77.8 million so far in April. The Sensex lost 546.03 points or 1.82% and the Nifty fell 123.10 points or 1.33% from record highs touched in April itself.

HDFC Securities said in a note that the Indian markets are relatively outperforming against Dow Jones over the last few weeks and further correction in Dow Jones is not likely to threaten Indian markets

According to Dipen Shah, senior vice-president, private client group research, Kotak Securities, the markets will focus on quarterly results and as valuations are high, Q4 results will need to meet or beat expectations, if markets have to sustain at current levels and move up. “Management commentary on the lingering impact of demonetization and their outlook for FY18 will be key factors to watch out for,” he added.

Some of the companies scheduled to announce Q4 results this week are TCS, HDFC Bank, Yes Bank, IndusInd Bank, Hindustan Zinc and ACC. Among mid-cap companies, Mindtree, Gruh Finance and Muthoot Finance will release March quarter earnings data.

Meanwhile, among commodities, gold price is expected to rise with investors flocking to risk-averse assets due to geopolitical worries. The yellow metal touched a five-month high last week.

On the macro front, wholesale price index (WPI) inflation data for March will be announced on 17 April. WPI increased to 6.55% in February from 5.25 % a month ago.

Other events to watch out for will be the US Federal Reserve meeting in May as well as the progress on goods and services tax in India.

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