Analysts foresee that the upcoming week in the domestic markets will be influenced by several key factors. These include ongoing second-quarter earnings reports, movements in the Brent crude oil benchmark, and geopolitical uncertainty in the Middle East. Additionally, the actions of Foreign Institutional Investors (FIIs) will play a crucial role in shaping market dynamics.
Santosh Meena, Head of Research at Swastika Investmart Ltd, emphasizes the significance of the impending earnings reports, particularly those from major market players, in influencing market direction. He also highlights the vigilance required regarding FIIs, who have been consistent sellers in recent times.
Foreign investors have withdrawn nearly Rs 9,800 crore from Indian equities this month due to the sustained rise in US bond yields and ongoing uncertainty stemming from the Israel-Hamas conflict. Despite a tumultuous week marked by significant events and high market volatility, the market managed to close on a positive note, largely attributed to robust domestic liquidity.
In the previous week, the BSE benchmark recorded a gain of 287.11 points or 0.43 percent. Vinod Nair, Head of Research at Geojit Financial Services, comments on the market’s performance, noting the rebound from a sluggish start. He points to positive expectations for second-quarter earnings and a moderation in global bond yields as contributors to the market’s positive momentum. However, concerns related to the Middle East conflict persisted.
Nair also highlights that despite higher-than-expected US inflation data and a subsequent increase in treasury yields towards the end of the week, domestic factors such as a significant drop in the Consumer Price Index (CPI) data and strong industrial production figures helped maintain overall optimism.
Official data shows that India’s retail inflation rates dropped to a three-month low of 5 percent in September, while factory output surged to a 14-month high of 10.4 percent. Nevertheless, a lackluster start to the earnings season, with subdued revenue guidance from the IT sector, coupled with rising crude oil prices, had an impact on the broader market trend.
Looking ahead, investors will closely monitor the progress of the second-quarter earnings season, with high expectations, particularly from sectors such as Auto, Finance, and Oil and Gas. In addition, the speech by US Fed Chair Jerome Powell on October 19 will be a crucial focal point, given the Federal Reserve’s ongoing interest in another rate hike by year-end to address inflation concerns.