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Q2 results, fund flows to dictate equity market movements (Market Outlook)

The second-quarter earnings result season, along with the direction of foreign fund flows and macro-economic data points, are expected to determine the trajectory of key Indian equity indices next week.

Market analysts said that crude oil prices coupled with rupee’s strength against the US dollar will also influence the market moves.

“The markets next week would get some sentimental support from stability in INR and crude oil prices,” Devendra Nevgi, Founder and Principal Partner, Delta Global Partners, told.

“The earnings season would be closely tracked as a factor to mitigate some of the volatility in the markets.”

Companies like ACC, Cyient, Reliance Industries, Infosys, Hero MotoCorp, IndusInd Bank and UltraTech Cement are expected to announce their Q2 earning results next week.

“Currently, broader markets look attractive while investors may seek more clarity from upcoming quarterly results,” said Vinod Nair, Head of Research at Geojit Financial Services.

“The continuity of this trend largely depends on stability on bond yields and INR. However, worries about US Fed rate hike, US-China trade dispute and political uncertainties in India on account of upcoming state elections may impact the sentiment in the short-term.”

Apart from the Q2 results, investors will look forward to the macro-economic data points of WPI (Wholesale Price Index) and India’s trade figures.

The Central Statistics Office (CSO) is slated to release the macro-economic data points of WPI on October 15.

“The trade deficit number due next week would be crucial for the INR moves,” Nevgi said.

On a weekly basis, the rupee closed at 73.56 last Friday, strengthening by 21 paise from its previous week’s close of 73.77 per greenback.

In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors sold scrips worth Rs 8,335.12 crore last week.

At present, outflows in just the nine trading sessions in October have reached over Rs 17,000 crore.

This has been one of the worst months in over a decade in terms of fund outflows.

On technical charts, the National Stock Exchange (NSE) Nifty50 remains in an uptrend as it has closed at new life highs.

“Technically, while the Nifty has bounced back smartly, the intermediate trend remains down,” HDFC Securities’ Retail Research Head Deepak Jasani told IANS.

“The downtrend is likely to continue once the immediate support of 10,138 points is broken. Crucial resistances to watch on the upside are at 10,492-10,605 points. A break of 10,866 points would change the trend of the Nifty.”

Last week, both the key Indian equity indices — S&P Bombay Stock Exchange (BSE) Sensex and the NSE Nifty50 — came in for some rough weather due to global worries over high crude oil prices and US interest rates during the period, but managed to catch the upside in the final session of trade.

The market swung widely with major losses of over 2 per cent in just one session — thereby pulling stock prices and the Indian currency lower.

Notwithstanding the general downturn, a timely plunge in crude oil prices, attractive valuations and liquidity infusion by the Reserve Bank of India (RBI) lured investors back to the Indian market.

Consequently, the S&P BSE Sensex closed at 34,733.58 points, up 353.54 points or 1.02 per cent from its previous close.

Similarly, the wider Nifty50 of the National Stock Exchange also made gains. It closed at 10,472.50 points, up 156.05 points or 1.51 per cent from the previous week’s close.

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