Quarterly Results Take Centre-Stage

There is a lot of stock-specific action taking place out there in global equity markets. Quarterly earnings of big companies have been taking centre-stage on the directional front. Mixed global earnings for yesterday combined with several macroeconomic factors is likely to result in a flat to negative opening for today on the Indian markets. Moreover, the course for the day would be dependent on some major results that are scheduled to be announced through the day.

Results of tech giant Apple have made headlines across the globe. Overall results for the heavyweight have been a tad shy of the estimates. iPhone shipments came in at 47.8 million as against the consensual expectation of 48 million. Similarly, revenues were reported to be USD 54.5 million as against the estimated USD 55 million. Net profit was flat as compared to the corresponding period in the previous year at USD 13.1 billion. The weaker than anticipated results coupled with a weak sales forecast brought share prices below the USD 500 per share mark. This resulted in a downward movement in technology supplier company stocks across Asia. On the other hand, upward movement in Google, IBM and Netflix in the US and Unilever and Novartis in Europe supported markets.

On the macroeconomic front, investors have been focussed on the next moves in the US over the prolonged and dramatic deficit issue. The House of Representatives was due to vote on raising the U.S. debt limit through the middle of May, while President Barack Obama was expected to sign such a bill if one is passed by Congress, said a leading financial website.

There was improvement in Chinese manufacturing data indicated by HSBC and Markit Economics’ preliminary reading of the manufacturing Purchasing Managers’ Index (PMI) for January. This indicator moved to a 24 month high of 51.9, up from the December reading of 51.5. Any reading above the level of 50 indicates expansion. Strong recovery is expected in the Chinese market from a cumulative inflow of varied data.

However, the mood in Asia was spoilt due to a wider than expected trade deficit for December in Japan. Japanese exports fell 5.8% from a year earlier while imports rose 1.9%. This led to a deficit of 641.5 billion yen.

Overall, global factors have led to a not-so-favourable backdrop for an upswing in Indian markets today. Today’s movement is expected to result out of stock-specific movement. Major results to be announced include Andhra Bank, Ashok Leyland, Bharat Gears, Biocon, Dhanlaxmi Bank, L&T, Sesa Goa, SKS Microfinance and Vijaya Bank. After a weak opening, the trend is expected to be directed by a cumulative effect of the movement of individual stocks.