Results, rate and reforms to guide markets

Third quarter results, coupled with budgetary expectations and key macro-data points are expected to drive the Indian equity markets in the coming week, market observers said on Sunday.

"The coming week will see the beginning of third quarter (Q3) earnings which will be the major trigger for markets," Vaibhav Agarwal, vice president and research head at Angel Broking, told IANS.

"Investors will focus on management commentary for the outlook on earnings growth."

The upcoming Q3 earning results will start rolling out from January 12, with major information technology (IT) firms expected to disclose their revenue guidance.

"IT companies would be the first to report and Q3 is seasonally a weak quarter for tech' companies," cited Pankaj Sharma, head of equities for Equirus Securities.

"This time, there have also been more challenges from Chennai floods, Paris attack and macro issues like US Fed rate hike and the immigration bill," Sharma added.

Besides the quarterly results, the week ahead will reveal domestic macro-data on industrial output and retail inflation which will be released on January 12, followed by wholesale inflation figures which will come out on Thursday.

"The IIP (index of industrial production) and inflation data will be watched keenly for further cues on interest rates," Agarwal said. 

The focus will also shift towards the ongoing pre-budget discussions between the finance ministry and industry representatives, said market observers.

"In focus would be budget related announcements and developments as FM (Finance Minister) hold parleys with opposition, as well as industry participants," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.

According to Agarwal, there are chances that markets might rally in the coming week on the back of specific announcements over the budgetary expectations by industry bodies.

Moreover, international cues, especially trends in Chinese markets, commodity prices and rupee value will continue to impact investors' sentiments.

It was a rout in the Chinese markets which cascaded into a global sell-off that lasted through the last week. 

"Global events and risk aversion will drive the markets in the short run, especially the Chinese markets and the yuan fixing," predicted Devendra Nevgi, chief executive of ZyFin Advisors.

Sharma elaborated that the Indian markets will hang on tenterhooks as China releases two key macro-data points - on trade and growth rate figures for the fourth quarter of 2015.

"In the next couple of weeks, there would be more data reported from China and this would influence market direction," Sharma added.

"We see a possibility of an even stronger and more aggressive policy response from the Chinese government, if these data points are not very good," Sharma said.

last week, the Indian bellwethers were pulled down by the Chinese economic crisis, which was triggered by lower-than-expected macro data points and an accelerated devaluation of the yuan.

Both the benchmark indices of the Indian equity markets lost over four percent each during the just-concluded weekly trade.

The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange (BSE) receded by a staggering 1,226.57 points or 4.68 percent to 24,934.33 points from its previous weekly close at 26,160.90 points.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) declined during the week under review. It ended lower by 361.85 points or 4.54 percent to 7,601.35 points.