Investors to take cues from Q2 earnings season

New Delhi, Oct 15

Investors will closely monitor the further commencement of the Q2 earnings season which has high expectations from sectors like auto, finance and oil and gas, says Vinod Nair, Head of Research at Geojit Financial Services.

The Indian market's rebound from a sluggish start, propelled by the positive expectations on Q2 earnings and moderation in global bond yield despite concerns over the Middle East conflict continues to hover, he said.

However, the release of higher-than-anticipated US inflation data and resulting increase in treasury yields marginally offset the positive trend by the end of the week. While domestic factors such as a significant drop in CPI data and impressive industrial production helped to sustain the broad optimism, he added.

Weak start to the result season by IT sector’s subdued revenue guidance, combined with uptick in crude oil prices affected the broad market trend. On the other hand, the realty sector performed well, fuelled by significant project launches and an uptick in pre-sales, buoyed by the onset of the festive season, he said.

Joseph Thomas, Head of Research, Emkay Wealth Management said the steady retail inflation in the US, the probability of further rate hikes in the US still remaining active, and the ongoing geo-political tensions, are factors that may dampen the market sentiment in the coming weeks too. But the reality of a strong domestic economy supports equities, and therefore, in any corrective downward movements it affords a significant amount of protection.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services said in the near term, markets would continue to take cues from macroeconomic data and ongoing Q2 results. Among index heavyweights, HDFC Bank will announce results on Monday, followed by Bajaj Finance, HUL, Bajaj Auto, Wipro, and ITC during the week. Overall, Indian markets have shown resilience despite several global headwinds gaining 0.5 per cvent for the week. We expect markets to remain in a broad range with positive bias on the back of strong economic data along with expected healthy corporate earnings.