Q4FY18 Results To Provide Direction To The Markets

The small-cap and mid-cap indices managed to challenge the negative sentiments with positive returns of 5.67 and 4.51 per cent, respectively, in the two-week period. The auto index led the recovery in the domestic markets with a gain of 5.72 per cent.

In the fortnight gone by, the market sentiment saw buoyancy after the RBI revised India’s growth projection upwards for the current fiscal to 7.4 per cent and lowered the inflationary forecast to 4.7-5.1 per cent for the first half of FY19. The strong trading in European shares on the easing of concerns about a sharp rise in the US interest rates also helped boost investors’ sentiment. 

On the global front, American markets continued their downward trend. In the last two weeks, Dow Jones fell 1.1 per cent, whereas S&P 500 slipped 2.03 per cent. Nasdaq, with a fall of 4.23 per cent, was the worst performing global index. European markets were on a recovery mode. UK’s FTSE100 outperformed its European peers with a gain of 4.28 per cent. Germany’s DAX and France’s CAC40 recovered 3.85 per cent and 3.79 per cent, respectively. Asian markets showed mixed sentiments. Hang Seng was down 2.30 per cent during the fortnight whereas Nikkei managed to put up positive returns of over 3 per cent during the same period. China’s Shanghai exchange remained flat. 

On the domestic front, bullish sentiments prevailed in the Indian markets during the last two weeks as both Sensex and Nifty notched up gains of over 2 per cent. All the sectoral indices traded in the green during the period under consideration. The small-cap and mid-cap indices managed to challenge the negative sentiments with positive returns of 5.67 and 4.51 per cent, respectively, in the two-week period. The auto index led the recovery in the domestic markets with a gain of 5.72 per cent. The metal and realty indices, which had witnessed maximum fall in the previous fortnight, also recovered 1.92 and 2.08 per cent, respectively. FII have been net sellers, having sold equities to the tune of Rs 1,491.38 crore, whereas the domestic institutional investors have been net buyers, lapping up equities worth Rs 6,794.10 crore. 

The effects of the ongoing probes and developments in the various banking loan default cases are also not likely to die down any time soon, keeping the market volatile and investors on their toes. However, the oncoming quarterly earnings season may significantly overshadow all other events in the markets.

Now, the markets are keenly awaiting the start of the quarterly earnings season, which is expected to set the tone of the market for the next few weeks going ahead. The forecast of notable earnings growth and margin expansion in Q4 results is likely to inspire a positive trajectory on the bourses for most of the sectors. In the earnings season, metals and IT sectors may see a bullish trend on the bourses on the back of strong Q4 numbers; whereas banking, telecom and aviation sectors are more likely to suffer a setback. While the earnings data will majorly set the tone for the markets for the coming few weeks, it is also likely to further decide the direction of the market in FY19.