Mumbai: The Indian markets are expected to consolidate further, with bouts of volatility ahead of the Karnataka state elections. In this week, investors will focus on oil prices and rupee movement, while the March-quarter earnings session is underway.
According to Teena Virmani, vice president of research at Kotak Securities Ltd, for medium to long term, focus would also remain on state elections in the second half of 2018 amidst earnings recovery, fiscal deficit, interest rate movement and demand revival ahead of general elections in May 2019.
Polling in Karnataka state elections will be held on 12 May in 223 constituencies out of 224. It is seen as a tough fight between the two opposition parties, Bharatiya Janata Party and Janta Dal (S), as incumbent Indian National Congress is campaigning aggressively to retain power. The counting of votes and announcement of result will be made on 15 May.
“Volatility is likely to remain in next week too. In the near term, markets would continue to focus on the outcome of assembly polls in Karnataka along with oil prices, yield movement, rupee depreciation. Also, by May 12, US President Donald Trump will decide whether to restore US sanctions on Tehran. If imposed, it would likely result in a reduction of Iran’s oil exports, thereby further lifting Brent prices,” she said.
On Saturday, US President Donald Trump spoke with British Prime Minister Theresa May and discussed issues including the Iran nuclear deal and the promotion of free and fair trade in particularly with regard to China. Trump’s remarks came ahead of British foreign secretary Boris Johnson’s visit to Washington. Johnson is expected to urge Trump not to scrap the Iranian nuclear deal also known as the Joint Comprehensive Plan of Action or JCPOA.
The UK and its European allies have until 12 May to persuade Trump to stick with the deal. Trump has set a 12 May deadline for the US and Europe to address the issues he has with the nuclear deal. Under US laws, the President has to recertify the deal every few months.
Back home, ICICI Bank will declare its March quarter earnings on Monday. Among the companies, which will announce Q4 earnings this week, are Eicher Motors, Allahabad Bank, Canara Bank, Dena Bank, Vijaya Bank, Federal Bank, Indian Bank, Oriental Bank of Commerce and UCO Bank.
“The market is still in a corrective mode. Results will not make any material impact on the stocks and markets but the outcome of Karnataka elections will be a crucial event to watch out for before making a move. On the sectoral front, realty, pharma, power, oil & gas, metals, cement are expected to continue its correction journey whereas profit booking is seen at higher levels in IT and FMCG,” said Jimeet Modi, founder and CEO of SAMCO Securities.
On the macro front, the government will release the industrial output data for March on Friday.