Macro-economic data to set the tone for equity markets

Street to keep watch on rupee and crude oil movement

In the absence of any immediate positive triggers, benchmark indices ended the week on a dismal note, as weakness in global equities weighed on the domestic markets. The fluctuation in crude oil prices, coupled with concerns of a slowdown in China dented the sentiments worldwide.

For the week ended February 5,  the S&P BSE Sensex ended 254 points, or 1.02 per cent lower, at 24,617. The Nifty settled at 7,489.10, down 74.45 points, or 0.98 per cent.

The broader markets also followed suit. BSE Midcap index fell 0.7 per cent, or 82 points, to end at 10,335, while BSE Small cap index closed at 10,569, down 300 points, or 2.76 per cent.

“The markets are trying to find a bottom, searching for reasons to stabilise,” said Jimeet Modi, chief executive officer, Samco Securities. He further added, “The anaemic rally, with equal bouts of buying and selling, is an indication that the market is likely to see choppiness in the near term. However, it will try to touch 7,600 -7,700 before any substantial movement can restart. The upward movement will face resistance at higher levels. Traders should buy on dips and investors could systematically add to their portfolio of quality stocks and keep patience.” Speaking on expectations, he remarked, “The current indecisiveness in the market will lead them to enter sideways and choppy zone. The market is expected to inch higher with lots of resistance on the upper side at 7600-7700.”

Key events
The Reserve Bank of India in its sixth bi-monthly monetary policy review maintained status quo on interest rates, with the repo rate kept unchanged at 6.75 per cent and the cash reserve ratio (CRR) unaltered at four per cent. The central bank stated that further rate cuts will depend on reform measures announced in the Union Budget 2016 to be announced on February 29.

On the macroeconomic front, India’s manufacturing data for January expanded to a four-month high, while Services PMI hit a 19-month high, thus showing revival in the sector, seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index and Nikkei India services purchasing managers' index showed.

Crude oil ended the week lower, snapping two weeks of gains, ahead of the crucial meet between the Opec and non-Opec countries to tackle the supply glut issue.

Results impact
Lupin rose 5.3 per cent for the week on the back of robust December quarter results. Its consolidated net profit up 29.6 per cent at Rs 529.80 crore. The stock registered almost a 10 per cent rise on Friday alone.

L&T gained 3.4 per cent, as its consolidated net profit increased 19 per cent to Rs 1,035 crore in Q3, compared to a year ago. Tata Steel reported a consolidated net loss of Rs 2,127 crore in the December quarter compared to net profit of Rs 157 crore a year ago. Maruti Suzuki tanked 9.13 per cent after the company reported a 2.6 per cent decline in total sales in January at 113,606 units, owing to lower export sales.

The week ahead
The government is all set to announce the December quarter gross domestic product (GDP) data on Monday. Along with the crucial GDP data, the consumer price index (CPI) for January 2016 will also be released next week on Friday.

The last leg of corporate earnings season will be announced next week. Among the prominent companies unveiling their financial numbers are Dr Reddy's Laboratories, Hindalco Industries,  GAIL (India) , Cipla, Coal India, State Bank of India, ONGC, Hero MotoCorp, Tata Motors, Bharat Heavy Electricals, NMDC, Sun Pharmaceutical Industries, Mahindra & Mahindra (M&M) and BPCL.

Chinese markets will be closed next week on account of the Lunar New Year.