Q3 Earnings, Union Budget And Trumponomics To Steer Markets Ahead

Indian markets seem to have started on a positive note amidst all the headwinds and rhetoric surrounding the growth of the Indian economy, post the sudden currency demonetisation move by the Indian government.The domestic markets seemed to have factored in all the negative impact of demonetisation and are now looking beyond it, both in terms of triggers and policy making on the part of the government. 

Both the benchmark indices Sensex and Nifty delivered positive returns supported by favourable macro-economic data that has been emerging. The positive data have highlighted that fears about adverse impact of demonetisation have been exaggerated. The broader market has outperformed the two frontline indices by large margins.The Mid-cap and Small-cap indices were the star performers during the past two weeks.

On the sectoral charts, Metals, Banks and Power indices continued with their strong run and have given returns of 7.85, 6.01, and 5.87 per cent, respectively. However, on the losing side were the IT stocks on account of the muted set of Q3 earnings posted by the two biggies, TCS and Infosys.

Globally, the markets remained more or less quiet after the new year break, with major global markets not seeing movement on either side. However, there were few geographical pockets bucking the trend and rising during the period under review. In commodities round-up, crude oil remained in the range of USD 50-55 with fear of US shale oil production going up post Trump taking office. Both base and precious metals saw good rally as it hit short-term highs.

In one of the biggest developments pertaining to GST, both the Centre and the states reached a consensus on the issue of dual control. However, the implementation of the landmark reform was postponed to July 1. In a major relief to foreign portfolio investors, the government has put on hold a controversial circular on taxing FPIs.

In our corporate dossier, India’s biggest conglomerate Tata Group appointed an insider in Natarajan Chandrasekaran as the new chairman of the group. The week also witnessed action on the Q3 earnings front with IT big boys delivering muted numbers, whereas select banks such as Indusind and DCB delivered stable results. Housing finance majors, including Gruh Finance, DHFL, LIC Housing and Can Fin Homes, posted better results than street expectations despite all the fears post demonetisation.

Going forward, markets will be taking cues from quarterly earnings of corporates to assess the real impact of demonetisation and the Union Budget. Globally, all eyes would be on the White House where president-elect Donald Trump would be assuming office.