Tonnes Of Cues To Play On The Markets

The Indian markets have been impacted by a host of trends including global macroeconomic cues, movement in the prices of gold and oil, hopes of favourable monetary policy and the quarterly results announcements. Over the last few days, two major cues have been responsible for the positive trend on the Indian markets. The heavy downfall in gold and oil prices would positively impact the current account deficit situation and inflation. At the same time WPI numbers came in lower than expected, thus giving the RBI more room for a rate cut in the upcoming monetary policy review meet to be held in May.

Yesterday we saw the Indian markets closing on a flat note as Reliance Industries, in its Q4FY13 numbers, missed estimates. IT firms too saw a negative trend, scarred by the results of Infosys and as concerns over potentially higher visa costs rose. However, rate sensitive stocks continued their upward momentum due to expectations of a rate cut on May 3, 2013. This resulted in a rather mixed trend on the Indian markets, ultimately leading to a flat closing.

The above factors will continue affecting the markets today as well. What will add to it are the developments in the global economy. The mood overall seems low globally due to reasons specific to geographies. The US was dragged down yesterday because of disappointing company results and a tepid outlook given by an Apple supplier. Europe too was low but because Egan-Jones Ratings Co. downgraded Germany to A from A+ over its exposure to its banks and weaker European Union members along with a growing debt-to-GDP ratio. These factors have also led to a weak opening on the Asian markets.

Coming back to the domestic scene, TCS announced its quarterly results yesterday. The tech giant announced a sequential growth of 2.2% in revenues in Q4FY13. However, the margins of the company were under pressure. Its operating profit margin and net profit margin saw a decline of 93 basis points and 8 basis points respectively. Meanwhile, volume growth stood at a healthy 4.4%, on a QoQ basis. The result has been not-so-good and is likely to weigh on the Indian markets today.

All in all, the background has been mixed because of a subdued global sentiment and optimism over the rate cut. Earnings have been taking centre-stage and driving stock and sector specific movement. Overall, yesterday’s closing suggests a directionally indecisive market. We expect the markets to open on a weak note today.