Markets Looking Forward To Earnings For Triggers
Trading data for institutional investors showed active trading, albeit in lower volumes. FIIs were net sellers to the tune of Rs 2,675 crore, while DIIs were net buyers with an inflow of Rs 1,321.54 crore during the fortnight.
As anticipated, the markets witnessed a tepid start to the New Year 2019. Global cues put down any excitement that tried to initiate a rally both ways during the fortnight. On the upside, the BSE Sensex tested 36,254, while on the downside, it dipped to 35,513. Markets have started reacting to earnings reports and outlook given by India Inc, with a consensus view that earnings will pick up, thereby giving direction to the indices.
The first fortnight of 2019 saw BSE Sensex and Nifty50 posting losses of 0.16 and 0.62 per cent, respectively. The broader indices followed the same trend with the BSE Mid-cap and Small-cap losing 1.69 and 0.72 per cent, respectively, during the fortnight. Sectorally, BSE Metal and Auto index lost the most as most automobile makers registered a drop in sales in the month of December. BSE Metal and Auto index lost 5.96 and 4.10 per cent, respectively, while Power index was down by 1.14 per cent with dues of discoms straining the balance sheets of power companies. BSE IT also saw a dip of 0.29 per cent during the fortnight. On the other hand, BSE Realty, Bankex and FMCG indices gained 1.98 per cent, 1.40 per cent and 1.09 per cent, respectively.
Internationally, major indices recovered, with the US-based Nasdaq and Dow Jones Industrial gaining the most after hitting historically low last fortnight. The US government shutdown is still on, but the US President Donald Trump tried to overshadow it by initiating a fresh round of trade talks with China, thereby giving the US market a trigger to recover. The tech index Nasdaq gained 5.07 per cent, followed by S&P 500 and Dow Jones Industrial, which were up by 3.57 per cent and 2.87 per cent, respectively. Among the European indices, the German-based index DAX gained the most, up by 3.11 per cent, followed by the UK’s FTSE100, up by 2.82 per cent, and the French CAC40, which was up by 1.07 per cent, during the fortnight. Asian indices also followed the trend and Hang Seng gained the most, up by 3.18 per cent, followed by the Shanghai Composite index and Nikkei, which gained 2.40 and 1.72 per cent, respectively.
Going ahead, the market is interestingly poised with Brent crude prices slipping on the back of certainty that the global economy is slowing down, with China leading the slowdown. Last week, data from Eurozone suggested that the region is heading towards a recession with the German economy showing weakness. The country is expected to experience GDP contraction this quarter. This global slowdown, which was aggravated by the trade war between the US and China, experienced some relief from the talks between Trump administration and Chinese representatives. On the domestic front, industrial production grew marginally, but inflation dropped, giving strength to the argument that the RBI should cut interest rate in its next monetary policy review. Market awaits Q3 earnings of heavyweights, including Reliance Industries, HUL, HDFC and Wipro for direction.
