Union
Budget 2020, macroeconomic data sets, such as RBI monetary policy outcome, and December quarter earnings will drive the market this week. Besides, coronavirus fears will also dictate the trend in the domestic market.
The week gone by turned out to be a nightmare for equity indices, as Nifty slumped below the 11,700 level, as market participants gave a thumbs down to Finance Minister Nirmala Sitharaman’s Budget.
The 30-share BSE Sensex plummeted 1,877.66 points to close below the 40,000 level at 39,735.53 last week. This included a 988-point slump in a special trading session on Saturday. NSE Nifty declined 300 points, or 2.51 per cent, to 11,662 for the day.
Going by the buzz on Dalal Street, here are the key factors that will guide the market next week:
Union Budget
The market saw a sharp sell-off on Saturday, but Sitharaman in an interview to ET NOW said that people shouldn’t judge the Budget by Saturday’s stock market crash.
“Budget was below par, considering that the market had very high expectations from the government. Support to the economy and more spending were lacking in details. Adding flexibility to fiscal deficit of FY20 is positive, but extending the same to FY21 would have provided more confidence to the market. In a normal scenario this Budget would have been considered good, as it had tax benefits for the common man, India Inc and focus on farmers’ income, but the situation required more.”
Q3 earnings
Over 700 companies will announce their financial results for Q3FY20 this week. They include Affle India on Monday, Adani Ports, Bharti Airtel and Titan Company on Tuesday, Cipla on Wednesday, Eicher MotorsNSE -1.34 %, Hero MotoCorpNSE -1.63 %, Lupin and Sun Pharma on Thursday and ACC, India Cements and NTPC on Friday, while M&M on Saturday.
Kotak Institutional Equities projected a loss of Rs 780.80 crore for Bharti Airtel against a profit of Rs 86.20 crore in the same period last year. The brokerage house also projected 16.40 per cent year-on-year fall in profit at Rs 1,036.50 crore for Sun Pharma during the quarter under review.
Coronavirus fears
Coronavirus outbreak will continue to guide global as well as domestic markets. According to media reports, the death toll from China's coronavirus has jumped to 304 with the number of cases climbed to 14,380. Taiwanese tech major Asus on Saturday said there will be a temporary shortage of its gaming smartphone ‘ROG Phone II’ due to disruption in supply chain.
Likewise, MG Motor India also forecast a hit on sales this month due to ‘significant disruption’ in supply chain from European, Chinese and other Asian suppliers due to the coronavirus outbreak.
RBI policy meet
Monetary Policy Committee of the Reserve Bank of India will meet from February 4-6 and announce its decision on the final day of the meet.
Analysts are expecting that after the recent hike in inflation rate, RBI may keep repo rates unchanged.
“We expect RBI to leave policy rates unchanged and retain its accommodative stance next week, but expect a 25 basis points rate cut in Q2FY20,” Nomura said.
Macro numbers
The market will also focus on IHS Markit India Manufacturing PMI data for January scheduled on February 3. The IHS Markit India Manufacturing PMI rose to a seven-month high of 52.7 in December 2019 from 51.2 in the prior month. Traders will also be eyeing IHS Markit India Services PMI for January on February 5.
Brexit
UK left the European Union (EU) on Friday night as it became the first country to exit the economic bloc after 47 years of membership, following the vote in favour of Brexit in June 2016.
While there will be little change instantly as the UK and EU enter into a pre-agreed period of transition from Saturday until the end of December, the process of complete extrication from the now 27-member economic bloc will begin right away.
However, much remains to be seen how British Prime Minister Boris Johnson negotiates trade talks with the EU and other major countries.
Rupee movement
Forex market was closed on Saturday. Any wild movement on Monday after Budget will add volatility in the market. However, Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking said, “Walking the tightrope, the finance minister has managed to adhere to the fiscal consolidation path barring a minor slippage, that was largely in line with the street expectations and should bode well for the Indian rupee in the medium term. Alongside, tweaki ..
Source: economictimes.indiatimes.com