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Week ahead: Earnings, macro data among 10 factors to drive market

February 11
03:02 2019

Earnings reaction, macro data and global cues, among others, will be on the top of investors’ radar for the upcoming week.

Bears had a field day on Friday as benchmark indices witnessed a big plunge, especially in the last hour of trade. The Sensex cracked a little over 420 points, while the Nifty gave up the psychological 11,000-mark and ended below 10,950.

Tepid global cues, selloff in big names such as Tata Motors and Vedanta dented sentiment. Weakness was visible among all sectors, with maximum pain seen in consumption, metals, and infra companies, among others.

For the week, indices have ended higher by 0.2-0.5 percent, while midcap index fell by around 2 percent.

Here are ten things that could keel D-Street busy:

Tata Steel results reaction

Investors will react to the results of Tata Steel, an index heavyweight. The company posted steady numbers for December quarter.

Tata Steel reported a surge of 53 percent (year on year) in its net profit for the December quarter at Rs 1,751 crore. The company had reported a profit of Rs 1,144 crore during the same quarter of last year.

The revenue has risen 23 percent at Rs 41,219 crore versus Rs 33,446.6 crore that was posted by the company last year.

At an operating level, the earnings before interest, taxes, depreciation and amortization (EBITDA) rose 18 percent to Rs 6,723.9 crore against Rs 5,697 crore reported last year.

The operating margin came in marginally lower at 16.3 percent against 17 percent last year.

Earnings

Over 2,000 BSE companies to declare results between February 9 and February 15, 2019

February 9, 2019: Apollo Hospitals, IDFC, Jaiprakash Power Ventures, PC Jeweller, PSP Projects and Thyrocare Technologies

February 11, 2019: Amara Raja Batteries, Andhra Bank, Astral Poly, Eicher Motors, Hindustan Aeronautics, India Cements, SpiceJet

February 12, 2019: Bata India, Coal India, Container Corporation, HEG, Hindalco, Karur Vysya Bank, Manpasand Beverages, NCC, and Sun Pharma

February 13, 2019: Adani Gas, Godrej Industries, Lemon Tree Hotels, Prabhat Dairy, Reliance Capital and Ruchi Soya

February 14, 2019: Glenmark Pharma, GVK Power, HDIL, Infibeam, MTNL, Nestle India, ONGC, Tata Teleservices, United Breweries, and Voltas.

Stocks in news:

Bharti Airtel: Airtel Kenya Signs agreement With Telkom Kenya To Combine Operations

Tata Steel Q3 profit surges 53 percent YoY to Rs 1,751 crore; India biz revenue up 10 percent

RIL says RRVL acquired a further stake of 9.44 percent in Genesis Colors for Rs 45 crore

Balkrishna Industries Q3

Net Profit down 23.6 percent at Rs 144.7 crore versus Rs 189.5 crore (YoY)

Dr Reddy’s: US FDA Audit of formulations Mfg plant-3 at Bachupally, Hyderabad has been completed

Lupin: US FDA issues 2 observations for Goa unit

Thermax

Net profit rose 29 percent to Rs 75.7 crore

Sun TV

The company reported a net profit increase of 32 percent at Rs 351 crore.

JK Lakshmi Cement Q3

Net profit has risen 71 percent at Rs 14.8 crore.

BPCL

Net profit for Q3 fell 59 percent at Rs 495 crore

SBI: The bank has reduced interest rate by 5 basis points to 8.7 percent for home loans up to Rs 30 lakh

IDFC Q3

The net profit has surged at Rs 26.3 crore

PC Jeweller Q3

The company’s net profit fell 15 percent at Rs 138.3 crore

Corporate Action

Apart from Board meetings by companies to discuss dividend or financial results, a few stocks will be in the news for corporate action.

For instance, Ajanta Pharma, Coal India and IEX will be in focus for a buyback issue. The stock of ASIL is looking at a capital reduction by 90 percent and consolidation at Re 0.50 to Rs 5 per share.

Macro Data

February 12: CPI for January to be released

– Cumulative Industrial Production for December

– Industrial Production for December

– Manufacturing output for December.

February 14, 2019: WPI inflation

Additionally, US retail sales, China FDI, US ISM non-manufacturing PMI, US inflation, Chinese balance of trades and initial jobless claims, among others, will be out as well.

Global Cues

Investors will be monitoring global developments, especially around US and North Korea.

President Trump said on February 8 that US diplomats had a “very productive meeting” with North Korean officials, and he announced his summit later this month with North Korean leader Kim Jong Un would be held in Vietnam’s capital, Hanoi.

“My representatives have just left North Korea after a very productive meeting and an agreed upon time and date for the second Summit with Kim Jong Un. It will take place in Hanoi, Vietnam, on February 27 & 28,” Trump said on Twitter.

US-China Trade Tensions

The Street will keep an eye on global developments, especially around the US-China front. Most recently, US President Donald Trump has expressed that he will be unable to meet Chinese Premier Xi Jinping before the March deadline. This sparked a fresh panic among investors, which led to a decline on global markets on Friday.

Now, US negotiators are preparing to press China next week on longstanding demands that it reform how it treats American companies’ intellectual property in order to seal a trade deal that could prevent tariffs from rising on Chinese imports.

A new round of trade talks begins in Beijing on Monday, after the most recent set of negotiations concluded in Washington last week without a deal and with the top U.S. negotiator declaring that a lot more work needed to be done.

Technical Factors

The Nifty closed below its crucial 5-days exponential moving average placed at 10,967 and made a strong bearish candle after forming a Doji candle which suggests a possible reversal in the trend.

The 5-DEMA acted as crucial support for the index soon after it made a bottom around 29-30 January. It breached the level on the downside in Friday’s session and now investors are advised to stay cautious and use rallies to create short positions.

The underlying trend of Nifty seems to have reversed down, after an indication of ‘bull trap’. Significant trend reversal pattern as per daily timeframe chart and failed upside breakout as per weekly chart could indicate a possibility of further weakness for the next 1-2 weeks, analysts at HDFC Securities wrote in a report.

“The next downside levels to be watched for Nifty at 10,585 (swing low of last week), which could be achieved in the next couple of weeks,” they added.

FII Data

The Street will take a note of foreign investor action as well. FIIs have emerged as net buyers so far in February, with net purchases being to the tune of Rs 3,581 crore.

A positive trend such as this continuing could spell good news for Indian markets, but there could be a probable threat to such flows if macro data shows no signs of improvement.

Rupee

The Street will watch out for rupee’s movement, going forward. The currency has been trading around 71 per US dollar levels. Lower crude prices have been pushing the currency higher.

However, unsteady global developments could strain the currency as well, which could have a negative impact on the market.

Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

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