Mumbai: The markets are expected to consolidate further this week with focus on corporate earnings while future and options expiry on Thursday may add to volatility. Rising crude prices, weakening of the domestic currency and political development ahead of the Karnataka assembly elections in May are key factors that investors are cautious about Indian markets now.
Last week, Brent crude moved near $74 per barrel mark and any sharp increase in crude oil prices raises India’s import bill as the country imports majority of its crude requirements. US President Donald Trump accused Organization of the Petroleum Exporting Countries (Opec) on Friday of “artificially” boosting oil prices after a year-plus pact that has slashed global crude inventories, drawing rebukes from oil-producing countries as prices dipped following his remarks. Opec is slated to meet in June to decide its next steps after reducing output since January 2017 along with other producers including Russia, aiming to reduce a glut that had sent prices into a tailspin.
On Friday, the Indian rupee had weakened past 66-mark per dollar to hit an over thirteen-month low, while the 10-year bond prices climbed 6 basis points as probability of rate hike increased after the central bank’s surprise hawkish minutes. The minutes of the April monetary policy committee (MPC) meeting reinstated the cautious approach of almost all members as inflation uncertainty has increased. Upside risks to inflation include minimum support price (MSP) increases, crude prices, fiscal slippage and staggered impact of states’ Seventh Central Pay Commission (CPC) house rent allowance (HRA) implementation.
Meanwhile, major companies which will declare their March quarter earnings this week are Reliance Industries, Maruti Suzuki India, Bharti Airtel, Axis Bank, Wipro, Biocon, Yes Bank, LIC Housing Finance, Bharti Infratel, Ultratech Cement and Bandhan Bank.
“Indications are mixed at present and thus we suggest focusing on earnings for cues. We feel the prevailing tussle would end next week and meanwhile traders should prefer hedged positions. Among the sectoral pack, IT, FMCG and metal look strong and we may see fresh surge in media stocks,” said Jayant Manglik, President, Religare Broking Ltd.
HDFC Bank will be in focus on Monday as investors will react to the Q4 results announced last Saturday. HDFC Bank Ltd’s net profit rose 20.28% in Q4FY18 on the back of higher net interest income and other income. Gross non-performing assets (NPAs), as a percentage of total advances, were at 1.30% in the March quarter compared with 1.29% in the December quarter and 1.05% in the year-ago March quarter.
The futures & options contracts for April series will expire on Thursday and a bit of volatility is expected around that period.
“The near term trend of Nifty continues to be positive amidst a range bound action. The important overhead resistance to be watched for next week is 10,630-650 levels, which is going to be a trend decider for coming weeks. An intermediate trend of Nifty is down and present upside bounce could be considered as a pullback rally of a down trend. Current upmove, so far, is not changed the intermediate downtrend status of the market,” said Nagaraj Shetti, technical research analyst, HDFC securities.