Q4 earnings, macros data among 7 factors steering market this week

NEW DELHI: The fourth quarter earnings picking up pace will set the course of the equity markets next week, along with progress on the Covid front and factory and inflation data.

After an extended period of lockdown, economic stimulus is badly needed. Meanwhile, unemployment and shrinking economic growth projections are fast becoming a reality.

“Though macro numbers to be released this week are not expected to surprise the market in any way, investors will be looking out for any silver lining in the commentary. Market rallies do not look sustainable and volatility is likely to rule the markets. Investors will also take cues from reduction in the number of infections,” said Vinod Nair, Head of Research at Geojit Financial Services.

Following factors are likely to guide the markets this week:

Q4 earnings
March quarter earnings will be in full swing this week. Mid and smallcap companies like Wockhardt and Godrej Properties will announce results on May 11. They will be followed by Bandhan Bank and Nestle the next day and Kotak Mahindra Bank and Maruti Suzuki on May 13. Biocon and Manappuram Finance results will be out on May 14 while Nippon AMC and L&T Tech will disclose their earnings on May 15.

IIP and inflation data due
India will release factory and inflation data during the week, which will be eyed by many. Both numbers are important times as they will reflect the damage caused by coronavirus and the lockdown.

Covid cases rise sharply
Number of Covid cases crossed 60,000 and Mumbai has emerged as an epicentre with over one-fifth of the total cases. 2,000 patients have succumbed to the disease. The sharp rise in the patient count has spooked market participants who will be closely monitoring the evolving situation.

Last week of lockdown
The coming week is the last one of the phase 3 of the lockdown, which is characterised by some easing of restrictions. However, sharp rising cases threaten an extension of lockdown with stricter measures, even as unemployment and economic plight are likely to rise.

Rupee hovers around 75/$
Shaky sentiments in the market ahead of key jobs reports from the US led the rupee to retreat from its crucial resistance of 75.20 mark.

“Going forward, the domestic currency will take further cues from the developments about the Covid-19 crisis, as well the key US data where expectations point towards staggering job losses of around 22 million. Markets are also pinning their hopes on the next round of stimulus from the government to cushion the economic damage inflicted by the Covid-19 crisis,” said Sugandha Sachdeva, VP-Metals, Energy & Currency Research, Religare Broking.

Fuel demand at record lows
India's fuel demand dipped 45.8 per cent in April from a year earlier, as a nationwide lockdown and travel curbs to combat the spread of novel coronavirus eroded economic activity. If there is no recovery in fuel consumption, which is an indicator of demand in India, it will further hit the revenue of oil marketers and explorers.

Technical outlook
Last week, Nifty remained in a narrow choppy range with a downward bias and seems to be forming a bearish harami/hanging man candlestick formation, said analysts.

“On a broader note, market breadth remained negative only with the index being managed by some of the heavy-weights. We maintain a bearish outlook on the index with crucial support at 8,900 on the downside, a decisive break below that can trigger a fresh round of selling. Traders should maintain a sell on rise strategy,” said Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote.