Mumbai: September quarter earnings, macro data and action in the primary markets are likely to keep the markets busy this week.
The quarterly earnings season that begins this week will show if corporates have been able to cope with the transitory disruption caused by the implementation of goods and services tax (GST). According to analysts, banks and commodities are likely to be the only large sectors to report profit growth owing to base effects.
Edelweiss Securities Ltd expects Nifty companies to report topline, earnings before interest, tax, depreciation and amortization (Ebitda) and net profit growth of 13%, 8% and 8% year-on-year, respectively, in Q2, implying 1% earnings per share (EPS) growth in the first half of FY18.
Companies which will announce July-September earnings this week include TCS, Reliance Industries, Kotak Mahindra Bank, South India Bank and IndusInd Bank.
According to HDFC Securities Institutional Equities, strong seasonality in September quarter and cross-currency tailwinds are expected to support growth. Impacted by a wage increase in select companies, Ebitda is likely to remain flat for the sector in Q2FY18.
“Large cap IT is expected to post 2.9% growth quarter-on-quarter while mid cap IT is expected to grow at 2.7% QoQ in Q2FY18. Within large caps, TCS and Infosys are expected to lead revenue growth at 3.5 and 3.6% QoQ,” it said in a report on 5 October. The rupee has lost 1.07% in the September quarter, but gained 3.91% this year so far.
The markets are also going to react to the slew of changes in GST rules that the government announced last Friday. The Council also lowered tax rates on 27 products and a few services and decided to clear all tax refund claims of exporters for July by 10 October and for August by 18 October.
In the primary markets, two initial public offerings (IPOs) will open for subscription this week. With a price band of Rs1,645-1,650 per share, Indian Energy Exchange (IEX) plans to raise Rs1,001 crore through its IPO, which will be open during 9-11 October. IEX is India’s first power exchange providing automated trading platform for electricity (for physical delivery) and renewable energy certificates.
The IPO of General Insurance Corp. of India (GIC), which is in a price band of Rs855-912 per share, will be open from 11-13 October. The state-run insurance company is looking to raise Rs11,370 crore through the share sale in which the government will dilute 12.26% stake.
On the macro front, Industrial Index of Production (IIP) data for August and Consumer Price Index (CPI) or retail inflation for September will be released on Thursday.
Globally, markets will react to minutes of the last Federal Open Market Committee (FOMC) meeting which will be released on Wednesday. In the last meeting in September, US Federal Reserve had left interest rates unchanged but signalled at one more rate hike by the end of the year. Most importantly, the central bank also said that in October it would begin to reduce its approximately $4.2 trillion in holdings of US treasury bonds and mortgage-backed securities.