Earnings season, macro data to drive equity markets (Market Outlook)

The upcoming quarterly results, along with macro-economic data points and global cues, are expected to determine the trajectory of equity indices next week, market observers feel.

According to analysts, investors' risk-taking appetite might also strengthen on the back of the smooth rollout of the Goods and Services Tax (GST) and healthy progress of monsoon rains.

"After a smooth rollout of GST, market is expected to look forward to Q1FY18 earnings, IIP (Index of Industrial Production), CPI (Consumer Price Index) and WPI (Wholesale Price Index) data," said Vinod Nair, Head of Research, Geojit Financial Services.

"In the near term, corporate earnings could be volatile due to de-stocking and could impact the margins. However, we can anticipate that consumer spending and business margins will increase due to lower pricing and taxation, increased sales volume and shift from unorganised to organised sector."

IT major Tata Consultancy Services (TCS) is expected to be the first blue chip to come out with its first quarter results on July 13, followed by Infosys on July 14.

"Market is expected to see stock-specific movement as earnings season will start and with no domestic trigger except corporate results, the index is expected to trade in a range of 200 points," pointed out Dhruv Desai, Director and Chief Operating Officer, Tradebulls.

Apart from the Q1 results, investors will also be looking forward to the upcoming macro-economic data points such as the IIP figures.

The Central Statistics Office (CSO) will release the macro-economic data points of IIP and CPI on July 12, Wednesday.

The CPI data will be followed by the release of WPI data by the Ministry of Commerce and Industry on July 14.

Besides macro data, the other major theme for the upcoming week can be the direction of foreign fund flows, observed D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors.

"Besides IIP number, the flow of foreign money, movement of crude oil prices and Indian currency will depict the trend of the market going forward," Aggarwal told IANS.

Investment-wise, provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) sold stocks worth Rs 1,948.83 crore, while domestic institutional investors (DIIs) purchased scrips worth Rs 2,361.61 crore last week.

On the currency front, the Indian rupee closed on a flat note last week at 64.59 against the US dollar.

On technical levels, the NSE Nifty is expected to touch new highs after crossing the immediate resistance level of 9,707 points.

"Technically, with the markets resuming their intermediate uptrend, the coming week could see the Nifty attempting to move to new life highs," Deepak Jasani, Head - Retail Research, HDFC Securities, told IANS.

"Further upsides are likely in the coming week once the immediate resistance of 9,707 (points) is taken out. Crucial supports to watch for any weakness are at 9,543 (points)."

In terms of global cues, the US Federal Reserve Chairperson Janet Yellen will testify before the Senate Banking Committee on Wednesday-Thursday, which could have a possible impact on international markets.

Last week, key equity indices gained around 1.5 per cent on the back of GST launch on July 1 and a healthy monsoon.

Consequently, the 30-scrip Sensitive Index (Sensex) of the BSE closed at 31,360.63 points -- up 439.02 points or 1.42 per cent from its previous week's close.

Similarly, the NSE Nifty rose by 144.9 points or 1.52 per cent to close the week's trade at 9,665.80 points.

(Rohit Vaid can be contacted at rohit.v@ians.in)

--IANS

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