Markets to rebound; Weak macro data, TCS Q3 numbers may cap gains

Weak November IIP, December CPI in addition to disappointing TCS Q3 to cap upside gains

Benchmark share indices are likely to rebound amid firm Asian cues and overnight gains on Wall Street. However, upside gains are likely to be capped after sluggish November IIP, December CPI data and weak third quarter earnings from TCS.

At 8:30am, the early indicator SGX Nifty was up 52 points at 7,589.

Meanwhile, foreign institutional investors were net sellers worth Rs 541 crore on Tuesday, as per provisional stock exchange data.

ECONOMY

Consumer Price Index-based (CPI) inflation for December rose to 5.61 per cent, against 5.41 per cent in November and 4.28 per cent in December last year, official data showed on Tuesday.

Industrial output fell 3.2 per cent in November, contracting by the sharpest margin in the past four years, government data released on Tuesday showed. The Index of Industrial Production (IIP) dipped for the first time in the past 13 months in November, after registering a five-year high rise of 9.8 per cent in October.

GLOBAL MARKETS

Asian markets were trading higher after rebound in Japanese shares after the correction in the previous session while Chinese shares were also trading firm after the pull back in late trades on Tuesday. The Nikkei was up 2.6% while Shanghai was up 0.8% and Hang Seng gained 2.4%. Straits Times was up 0.2%.

US equities ended higher on Tuesday led by energy shares after oil prices stabilised while gains in Apple also boosted the tech-laden Nasdaq and the broader S&P 500. The Nasdaq ended up 1% while Dow Jones industrial average gained 0.7% and S&P 500 ended up 0.8%.


STOCKS IN FOCUS

TCS may be under pressure after it reported lower-than-expected revenues in the December quarter. This is for the sixth quarter in a row that the Mumbai-headquartered company misses the Street’s revenue estimates. The revenue at Rs 27,364 crore grew 11.7% on a year-on-year (y-o-y) basis against a consensus revenue of Rs 27,643 crore.

The department of telecommunications (DoT) has asked Reliance Communications (RCom) to pay Rs 5,384 crore for sharing its 800 MHz spectrum in 16 circles. The spectrum liberalisation fee would apply to all circles where airwaves weren’t sold via auctions.

Federal Bank may extend losses after the private lender posted a 38.5% drop in net profit at Rs 162.7 crore for the third quarter ended December due to a rise in bad loans.

Strides Shasun may see some action after it received Commission of Indi’s (CCI's) nod to acquire Sun Pharmaceutical's two business divisions in India for Rs 165 crore.

DCB Bank may be under pressure after gross non performing assets as a percentage of total advances increased to 1.98 per cent at the end of December quarter, from 1.87 per cent in the same period a year ago.