Week ahead: RBI policy, earnings among 10 factors to move the market

Moneycontrol.com: February 03, 2019

The Reserve Bank of India (RBI) policy, key earnings, as well as technical factors, among others, will be on investors’ radar this week.

The market ended last week on a positive note, especially after digesting all major cues from the Interim Budget presented by Interim Finance Minister Piyush Goyal.

It was certainly not a trading session for the weak-hearted as the Budget-day trading was marked by severe volatility. Indices, eventually, managed to end in the green, but not before seeing wild swings in both the directions. The Nifty ended below 10,900-mark.

For the week, both indices have closed with gains of over a percent. Among sectors, IT was the big gainer, while metals lost the most.

RBI Policy

Investors will eye outcome of the RBI Monetary Policy Committee (MPC) meeting. It assumes significance after the Interim Budget witnessed moves to shore up consumption demand. Will the central bank follow suit and cut repo rates and CRR to ease pressure on banks?

This will also be the first policy meeting of new Governor Shaktikanta Das after he took over from Urjit Patel.

Earnings

Results on February 4: Coal India (Buy Back), IDBI Bank, IRB Infrastructure, Indian Overseas Bank and Exide Industries.

Results on February 5: Tech Mahindra, GAIL, HPCL, ACC, BHEL, Punjab National Bank, Oriental Bank of Commerce, IDFC First Bank, DLF, Apollo Tyres, Tata Global and Dish TV.

Results on February 6: Lupin, Cipla, Siemens, Adani Ports, Adani Power, JSW Steel and Allahabad Bank.

Results on February 7: Tata Motors, Aurobindo Pharma, Britannia, Adani Enterprises, Coffee Day, Cadila Healthcare, Arvind and Grasim.

Results on February 8: Mahindra & Mahindra, NHPC, BPCL and Engineers India.

Results reaction

Traders will react to the results of an index heavyweight such as Titan.

The jewellery-to-watch maker Titan Company has reported a healthy 43.5 percent on year growth in third quarter consolidated profit to Rs 413.2 crore, driven by revenue growth and strong jewellery business during festive season.

Profit in same period last year stood at Rs 288 crore.

Revenue from operations during the quarter grew by 34.6 percent year-on-year (YoY) to Rs 5,871.5 crore with jewellery business growing 37 percent YoY.

The topline growth was driven by these new introductions, some successful activations as well as measured network expansion.

The income from watches increased 18.8 percent to Rs 641 crore, but figures were not comparable as the income last year was post a higher Goods and Services Tax (GST) rate for part period, hence the growth appears inflated, Titan said. The real growth at net consumer prices was 12 percent.

Technical Factors

For the week the Nifty formed a bullish candle.

The underlying trend of Nifty is still in a broader high low range, and Nifty is currently placed near a key overhead resistance of 10,950-985 levels, analysts at HDFC Securities said in a report. There is a lesser chance of 11K going to be broken on the upper side.

Even if Nifty breaks above 11,000 mark, then there is a higher possibility of weakness emerging from the highs (max up to 11,200), there by leading to a fake upside breakout.

"The initial downside target to be watched for Nifty is 10,000, which could be achieved in the next couple of months. On reaching this 10,000 mark, the chart pattern could unfold major weakness in the broader market," they further wrote.

Stocks in News

Titan Q3

Net profit up 35 percent at Rs 416 crore, revenue up 34.4 percent at Rs 5,672.2 crore.

HG Infra Engineering Q3

Net profit rose to Rs 35.25 crore vs Rs 18.95 crore, revenue up at Rs 550.59 crore vs Rs 321.61 crore, YoY.

Artson Engineering Q3

Net loss at Rs 1.06 crore vs profit of Rs 40.86 crore, revenue at Rs 29.79 crore vs Rs 23.04 crore, YoY.

Equitas Holdings Q3

Net profit at Rs 62.5 crore as compared to loss of Rs 30 crore in Q3FY18.

Voltamp Transformers Q3

Net profit down at Rs 22.22 crore as compared to Rs 23.60 crore in Q3FY18.

Cyient approves buyback of shares worth Rs 200 crore, buyback at not more than Rs 700 per share.

Tata Motors January auto sales:

Total domestic sales down 8 percent at 54,915 units vs 59,441 units

CV domestic sales down 6 percent at 37,089 units vs 39,386 units, YoY.

Wipro launches Next-Gen ATSC 3.0 Digital TV receiver solution.

National Fertilizers declared payment of interim dividend of Rs 1.09 (10.90 percent) per equity share for the financial year 2018-19.

DHFL approved disinvest to BCP Topco VII Pte. 23,01,090 (9.15 percent) equity shares in Aadhar Housing Finance.

Akzo Nobel appointed Lakshay Kataria as a whole time director and chief financial officer of the company.

Berger Paints appointed Anoop Hoon and Sonu Bhasin as additional, non-executive and independent directors.

Manappuram Finance to consider declaration of interim dividend on February 06.

Ajanta Pharma approved the proposal to buyback fully paid up equity shares of the company.

Corporate Action

Apart from meeting to discuss financial results, several companies will be meeting to discuss a dividend issue or other corporate developments.

For instance, stocks such as Sharda Crop, Edelweiss, Torrent Pharma, RBL Bank, Granules India and BEL, among others, will have meetings to discuss dividend issue or go ex-dividend.

Additionally, names such as Container Corporation will see a bonus issue in the ratio of 1:4. HEG and ShantiGear will have buyback issues to be discussed.

Macro Data

Back home, the PMI data will be released for the month of January along with the outcome of RBI policy meeting.

US will release its payroll data along with purchasing managers’ index. US GDP data will also be announced and hence investors will take a note of that.

Global Cues

Investors will keep a note of developments on the global front, especially in cases of events such as US-China trade relations. Additionally, the crisis in Venezuela, which is pushing oil prices higher, along with US-Russia relations could dominate traders’ minds.

President Vladimir Putin on February 2 said Russia was suspending its participation in a key Cold War-era missile treaty in a mirror response to a US move the day before, agencies reported.

Crude

After witnessing a near 30-percent fall last month, the prices of crude are back on the higher side, hovering around $62 per barrel. The trajectory for this commodity will be in focus as it tends to shake up markets such as India.

India is a major importer of crude and high prices could affect its fiscal situation as it has to shell out more money to buy oil.

Some US refiners have begun reducing crude processing as the sanctions have boosted oil costs and as gasoline margins crashed to their lowest in nearly a decade, market sources told Reuters on January 31.

In January, Saudi Arabia pumped 350,000 bpd less than in December, a Reuters survey showed. Supply in November had hit a record-high 11 million bpd.

Rupee

A direct impact of the crude prices will be seen on the Indian rupee as well. The currency has been hovering above 71 per US dollar mark for a while now. Further rise in the rupee could only spell for the market here.

“Indian rupee may remain under pressure as Brent continues to rise which is likely to have a negative impact on inflation and current account. FII selling and rising oil prices continue to support a further rise in USD-INR pair, the key resistance level is broken near 70.80; next level is seen near 72.60 while important support remains near 70.40-69.90,” Abhishek Bansal, Chairman of ABans Group of Companies had said in a statement last week.

FII activity

Foreign investors have turned net buyers in this month so far and such a trajectory could only boost the market, going forward. Around Rs 1,300-crore worth of shares have been bought by FIIs so far, but the key highlight has been the recent Rs 3,000-crore purchase of shares by FIIs.

Link: https://www.moneycontrol.com/news/business/markets/week-ahead-rbi-policy-earnings-among-10-factors-to-move-the-market-3475431.html