Market Week Ahead: Earnings, auto sales, Fed meet among 10 factors that will matter

In the coming week, earnings declarations are likely to dominate D-St as frontline firms will exhibit their performance for the Sept quarter

Equity markets ended mixed after consolidation on Friday despite positive global cues, as investors awaited more corporate earnings for signals. Benchmark indices hit fresh record highs in opening but could not hold those gains for long and remained range-bound throughout the session.

For the week, the Nifty gained 1.7 percent and the Sensex rallied 2.4 percent.

On Friday, the 50-share NSE Nifty snapped a four-day winning streak, falling 20.80 points to close at 10,323 after hitting an intraday record high of 10,366.15.

The 30-share BSE Sensex ended at a fresh record closing high of 33,157.22, up 10.09 points from the previous close.

Broader markets also closed flat on balanced breadth. About 785 shares advanced against 716 declining shares on the NSE.

The week also saw the market getting a huge boost after the government announced a bank recapitalisation plan of Rs 2.11 lakh crore as well as an infrastructure push worth Rs 7 lakh crore. PSU banks and infra stocks subsequently pushed the market to fresh record highs as well.

"FIIs turned out to be net buyers in cash segment after these announcements. Maruti came out with good results ensuring growth is on track. However, listing of GIC Re during the week was disappointing. Undertone for next week remains positive. However, NIA issue next week will suck good amount of liquidity from the market,” Anita Gandhi, Whole time director, Arihant Capital Markets said in a statement.

In the coming week, earnings declarations are likely to dominate D-Street as frontline companies will exhibit their performance for the September quarter. Macro data such as IIP and purchasing managers’ index will also keep investors on their feet.

Along with this, some global market-moving developments are set to take place such as the US Federal Reserve’s meeting along with those of central banks in England and Japan.

299 BSE companies to declare results

As we enter the thick of earnings season, several major companies are set to declare their results later this week. Between October 28 and November 4, 299 BSE companies will be declaring their earnings. The Street will keep an eye for cues from these results.

The major ones include Adani Transmission, Bharat Financial Inclusion, Jubilant Lifesciences, Alembic Pharma, Central Bank of India, Century Ply, HDFC, IDFC, Lupin, Marico, Sintex, Supreme Industries, Tata Steel, Bharti Airtel, Blue Star, Dabur, Dr Reddy’s Laboratories, InterGlobe Aviation, Syndicate Bank, Godrej Consumer Products, Hexaware, Tech Mahindra, TVS Motor, Glenmark, Edelweiss, Hindalco, and Punjab National Bank.

IPOs

The action on the primary market does not seem to end. Three more companies will be hitting the Street with their initial public offerings (IPOs) and one of those could see keen investor interest, experts believe.

Footwear retailer Khadim India, Mahindra Logistics and New India Assurance will open their issues on November 2, October 31 and November 1, respectively.

Whether the liquidity present in the market drive up the subscriptions in this case well is something to wait and watch. Additionally, New India Assurance will be a major IPO lined up and add to the list of insurers looking to raise funds.

Corporate Action

A few of the two-wheeler companies could be in focus as they take legal recourse against the Karnataka government’s order on two-wheelers with pillion seats.

According to a report on CNBC-TV18, Hero MotoCorp and TVS Motor have moved the Karnataka High Court against an order which called for ban on pillion riders in sub-100 CC bikes. Both companies are said to have filed separate pleas in the court, which will be up for hearing on Monday. The suit by Hero MotoCorp follows the drop in sales of sub-100cc bikes in Karnataka to zero.

Additionally, there could be some moves on Anil Ambani-run Reliance Group stocks. The group has entered the aerospace business and laid the foundation stone for Dassault Reliance Aerospace. Further, Ambani also informed that the entire lifecycle maintenance of Rafale will be done by DRAL, while all future needs of Rafale will be produced by the firm.

Apart from these, some stock-related developments are also likely. Infinite Computer Solutions’ bonus issue will be on the cards as it announces 1:26 issue. Apart from that, Atlas Cycle and HCL Infosystems could also be in focus as they announce a stock split and a rights issue.

Infosys buyback

IT bellwether Infosys will be undertaking its buyback offer this week and the Street could take a note of that. The stock could see some movement and as a result impact the index as well.

The firm will buy back 11.3 crore shares or 4.92 percent of equity capital at Rs 1,150 apiece. It will be spending Rs 13,000 crore for the same.

The company further said that the buyback represents premium of 17.73 percent and 17.92 percent on BSE and NSE, respectively, over the closing price of the stock as of August 16, 2017, the date of intimation to the exchanges of the board meet to consider the proposal of the buyback.

Macro Data

On the data front, the purchasing managers’ index (PMI) data for manufacturing and services PMI will be out in the upcoming week with the onset of a new month. Any good cues from the data could be digested well by investors going forward. The Nikkei manufacturing PMI will be declared on November 1, while services PMI will be declared on November 2.

Additionally, CPI data in Europe, household and jobs data in Japan, Bank of Japan’s monetary policy, ISM data in the US, crude imports by US and non-farm payrolls, among others, will be declared and investors could closely watch this data.

Global Cues

Investors will look forward to key central bank-related activities as the US Fed, Bank of America and Bank of England have their meetings lined up during the week. Experts are anticipating a status quo for the FOMC meet.

Additionally, external developments such as geopolitical tensions on the North Korea front along with movements on Catalonia and Spain could be a factor.

Catalonia's parliament declared independence from Spain on Friday in defiance of the Madrid government, which at the same time was preparing to impose direct rule over the region. Although the declaration was in effect a symbolic gesture as it will not be accepted by Spain or the international community, the moves by both sides take Spain's worst political crisis in four decades to a new level.

Meanwhile, US defence secretary Jim Mattis has said the threat of nuclear missile attack by North Korea is accelerating. In remarks in Seoul with South Korean defence minister Song Young-moo at his side, Mattis accused the North of illegal and unnecessary missile and nuclear programs – and vowed to defeat any attack.

Technical Factors

On the technical front, experts believe that the week ahead could see trade with a strong bias as earnings numbers so far have been steady and expected to be better going forward.

“More or less, the numbers were in line with market expectations barring some exceptions like Axis Bank and Yes Bank which negatively surprised the Street,” Jimeet Modi, Founder and CEO of Samco Securities told Moneycontrol, adding that the market’s moves ahead are likely to continue with intermittent hiccups with intraday corrections.

He further highlighted that the market had moved from strength to strength after a decisive close above 10,200. A closure above this mark was necessary for the market to rally further. “Traders should ride the wave and go long with tight stops,” he added.

Auto sales

The Street will watch out for monthly auto sales numbers that will be declared later in the week. The numbers could be crucial and are likely to be higher as numbers from festive season sales could also be incorporated in these. So stocks such as Maruti Suzuki, Bajaj Auto, TVS Motor, Hero MotoCorp, and Tata Motors, among others could be in focus.

FII Data

The market has found good support from domestic institutional investors even as FIIs looked to sell. As of October 27, 2017, FIIs were net sellers of Rs 7,108.67 crore, while DIIs purchased shares worth Rs 9,354.31 crore, highlighting the positive momentum on the part of Indian investors. The Street will keep a note of whether the same is carried on to November as well.

F&O Data

From the derivatives market, last week, maximum Put OI was seen at 10,000 followed by 10,200 strikes while maximum Call OI was seen at 10,500 followed by 10,400 strikes.

“Option band signifies the shift of range to higher zones with the upside scope of 10,500 in the November series. It formed a small Bearish candle but major trend is intact to positive till it holds above 10,250 zone,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol. “Now, it has to hold above 10,300 to witness an up move towards 10,400 and then towards 10,500 while on the downside supports are seen at 10,250 and then towards 10,178.”