Markets Await Earnings Trigger

There are exciting times ahead for the investors as the markets are poised to take direction from the March quarter and annual earnings reports of India Inc. Factoring in positive earnings data, the benchmark indices displayed steady uptrend and hit the 39,000 mark during the fortnight. The BSE Sensex traded above the psychological mark of 38,000 and gained 1.40 per cent, while the Nifty50 was comfortably above the 11,000 mark, gaining 1.29 per cent during the fortnight.

The broader markets also participated in the uptrend with the BSE Mid-cap moving up significantly by 2.13 per cent and the BSE Small-cap following with a 1.54 per cent gain.

Sectorally, BSE Metal and BSE IT sectors gained the most, up by 4.06 per cent and 3.41 per cent, respectively, while the BSE Auto, which was beaten down last fortnight, recovered and was up by 2.29 per cent during the fortnight. Besides, FMCG index, which dipped less than half-a-per cent, all other indices gained more than one per cent during the period.

With the election campaigns in full swing, the two major political parties in India, Indian National Congress and Bharatiya Janata Party (BJP) released their manifestos recently. In a bid to win significant vote share, politicians tend to promise the moon to the masses during elections. This practice of appeasing the masses burns a hole in the taxpayers pocket when the electoral sops are implemented.

BJP had already made its vision clear in the interim budget, which the Congress tried to outsmart in its manifesto promising a minimum income guarantee scheme called NYAY. But finally, good sense has prevailed and investors can be thankful that BJP’s manifesto does not promise unrealistic income guarantees which may overburden taxpayers in order to dole out freebies. Investors can take heart from the fact that ample emphasis is given to the traders and small businesses in the manifesto, thereby ensuring that policy reforms continue.

In the international market, most major indices were up more than 3 per cent. The US-based Dow Jones Industrial and S&P 500 gained 3.29 per cent and 3.39 per cent, respectively, while the Nasdaq index lost 0.56 per cent during the fortnight.

The UK is due to leave the European Union on April 12, which is hardly possible given that the British parliament is yet to finalise the terms of the Brexit deal. It is highly likely that the Brexit deadline may be extended which will give Britain the much-needed time to decide upon its further course of action. Reacting to this, the European indices were upbeat, with UK’s FTSE 100 going up 3.39 per cent, while German DAX gained 5.27 per cent and the French CAC 40 was up 3.83 per cent.

The major Asian indices were mixed, with Hang Seng up by 3.31 per cent and the Shanghai Composite up by 4.53 per cent, while the Japanese Nikkei was up by 0.62 per cent during the fortnight. Institutional investors were pretty active in the Indian equity markets this fortnight. Trading data shows that once again, the foreign institutional investors (FIIs) were net buyers, while the domestic institutional investor (DIIs) were net sellers. FIIs were net buyers to the tune of Rs. 17,566.32 crore, while DIIs were net sellers with an outflow of Rs. 691.89 crore, during the fortnight.

Markets are expected to remain cautious with the crude oil price charting new highs in the international markets. On one hand, the reduction of crude oil supply from Libya are pushing the prices higher, while on the other hand, economic slowdown is keeping them in check.

Domestic cues such as earnings reports and elections are expected to excite the markets every now and then and keep the investors on their toes.