Inflation data, Q3 earnings to drive market

Tags: Stock Market
Market may keenly watch the third quarter results of bluechip companies and inflation figures for directions this week. With Infosys raising its guidance for the fourth quarter, all eyes would be on TCS, Wipro and HCL Technologies, which will report December quarter earnings on Monday.

"Infosys kicked off the results season on a good note and one can expect healthy numbers from most other large IT companies as well. Valuations are at around the long-term average, based on consensus estimates for the Sensex companies. We remain positive on select stocks in FMCG, IT, oil and gas, cement, metals, logistics and auto," said Dipen Shah, head of research at Kotak Securities.

Reliance Industries, Axis Bank, Bajaj Auto, ITC, HDFC Bank and UltraTech Cement would be some other Nifty companies, which could influence market sentiments.

"There would be stock-specific action based on results. Markets are keenly awaiting action on administered fuel price hikes. With high global liquidity, continuation of the domestic economic policy reforms momentum and expected policy interest rate cuts, our markets are likely to continue to attract strong FII flows. We advise investors to stay invested and accumulate quality stocks on correction. Stocks with institutional under-ownership are likely to perform in the near term. Mid-caps are likely to outperform large-caps as there is a lot of valuation catch-up to do," said Vivek Mahajan, head of research at Aditya Birla Money.

A median survey of 34 economists suggested inflation for December to arrive at 7.37 per cent, compared with 7.24 per cent in the preceding month.

"The markets continue to pin their hopes on a rate cut by RBI in the January 29 money policy review, but that move would be influenced by the Monday inflation numbers. Inflation has been trending down with the last print to 7.24 per cent and has provided room for a rate cut, but uptick in food prices, possible hikes in diesel prices and railway prices, hike in wheat minimum support prices, and a possible setback to rabi crops due to sever cold weather conditions in north would limit space for a rate cut," Krishnamoorthy Harihar, a treasurer at FirstRand Bank.

Amar Ambani, head of research at IIFL infact sees inflation data to the key event this week. He also believes that the slew of earnings and global developments needs to be closely watched.

"The indices may continue to remain in a range even as stock-specific activity will dominate the headlines," he said.

Sensex and Nifty fell 0.61 per cent and 1.08 per cent, respectively, last week. amitmudgill@mydigitalfc.com

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