As the market enters into an interesting week, investors will keep a close eye on five key things. July-September corporate earnings will give directions to the market next week.
The Sensex added 612.64 points or 3 percent to close at 20528.59 while the Nifty jumped 188.90 points or 3.2 percent to close tad below the 6100 level at 6096.20 last week. It was an addition to one percent upmove in previous week. Banks and technology stocks were the most active stocks.
So, here are the five things that the market will track next week
US debt ceiling resolution
Investors are hopeful for a solution to end the partial US government shutdown and raise the US borrowing limit to avoid a possible default. The Senate is expected to vote over the weekend on extending the federal debt limit through January 2015. Next week the deadline expires on October 17.
There is finally some breakthrough in the US shutdown impasse. On Friday, US President Barack Obama and US house speaker John Boehner spoke. This is after US officials said that house republicans had offered to pass legislation to avert a default and end the 11-day government shutdown, though with some riders.
Industry output data
Industrial output data of August, announced after market hours on Friday, was very disappointing. After a 2.6 percent rise in July, IIP has come to a screeching halt in August. Industrial output has slowed down to a mere 0.6 percent. Manufacturing, capital goods and mining growth, too, have contracted.
Dipen Sheth of HDFC Securities feels the disappointing IIP data is going to be just absorbed without even battling an eyelid. "Right now, what is mattering for the market is the big picture comfort on whether money flows are going to come into the country or not. That is a function of what is happening in the US on the debt ceiling argument," he said in an interview to CNBC-TV18.
Inflation
Wholesale price index (WPI) data is seen to rise 6 percent in September, a tad below a six-month high of 6.1 percent in August. Consumer inflation, also due on Monday, probably quickened to 9.60 percent last month from 9.52 percent in August, a Reuters poll show.
Ajay Marwaha, head-treasury at HDFC Bank thinks that the dismal IIP number not is going to be a big trigger but the inflation data on Monday is going to assume far more significance. "The market will continue to position for and keep itself more concerned and more alert to inflation rather than to IIP," he said in an interview to a CNBC-TV18.
September quarter earnings
September quarter earnings of key companies will be announced next week. Investors will keep an eye on Q2 results of IndusInd Bank , Reliance Industries , HDFC Bank, TCS , Bajaj Auto , Axis Bank , HCL Technologies , L&T and UltraTech Cement over the week.
KR Choksey expects RIL to report a 1 percent growth quarter-on-quarter (up 1 percent year-on-year) in net profit at Rs 5,409 crore.
Revenues are expected to increase by 4 percent Q-o-Q (up 2 percent Y-o-Y) to Rs 94,227 crore, according to KR Choksey. "Earnings before interest, tax (EBIT) are likely to rise by 2 percent Q-o-Q (flat year-on-year) to Rs 9,811 crore," it says.
Sampath Reddy of Bajaj Allianz Life Insurance Company says, "Infosys has done very well and few private banks also would probably do so. But, overall among top 200-300 stocks, we would see a significant amount of deceleration in earnings this quarter. But, most of it is priced in, especially in the last two years or so."
Tech Mahindra
The Reserve Bank increased limit for foreign institutional investors (FIIs) to buy shares in Tech Mahindra up to 45 percent of the paid up capital of the company.
"The Reserve Bank of India notified that Tech Mahindra has passed resolutions...,agreeing of enhancing the limit for the purchase of its equity shares and convertible debentures by FIIs, through primary market and stock exchanges up to 45 percent," RBI said in a notification.
This limit has been revised from earlier limit of 35 percent of the paid up capital of the company under Portfolio Investment Scheme.
(Posted by Nasrin Sultana)
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