Macro data, Q3 earnings vital for Dalal Street

Indian stock markets registered losses for the second week in a row in tandem with sell-off in global equities amid volatility in crude oil and commodity prices. Meanwhile, macroeconomic data and mixed bag of earnings influenced the sentiments.

In the week to May 6, the BSE Sensex ended down 1.5 per cent at 25,229 and the Nifty50 settled 1.5 per cent lower at 7,733. In the broader markets, BSE Midcap index fell 0.7 per cent and BSE Smallcap index lost one per cent.

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Ravi Shenoy, VP-Midcaps Research, Motilal Oswal Securities believes “Nifty ended the week weaker by 1.5% on continued global nervousness. Banks, IT and metals were the main culprits this week with action dictated by quarterly results and industry specific news flows.”

He adds,” Earnings will continue to be a key driver and we do not see any near-term trigger for the Nifty to take out the 8,000 level. Therefore, we advise investors to play it by the ear and remain stock specific.”

KEY EVENTS

The Nikkei purchasing managers’ index (PMI) survey showed that rate of manufacturing growth decreased to 50.50 in April from the eight-month high of 52.4 in March as rise in new orders lost steam.

Also, growth in India's services firms fell to a four-month low of 53.7 in April from 54.3 in March on the back of new business growing slower than the previous months.

In contrast, the combined output of eight crucial infrastructure sectors jumped to a 16-month high of 6.4 per cent in March due to a double-digit growth in refinery products, fertilizers, cement and electricity.

On the global front, Japanese stocks tumbled as the yen surged to 1-1/2-year high against the dollar while the Chinese shares plunged on deceleration in China's manufacturing activity in April 2016.

STOCKS

Adani Ports and Special Economic Zone (SEZ) emerged as the biggest loser this week and slumped 18 per cent on reporting lower than expected EBITDA margin for the quarter ended March 2016.

Meanwhile, shares of metal and mining companies fell amid renewed global growth concerns in the wake of weaker-than-expected Chinese manufacturing data. Tata Steel, SAIL, JSW Steel, NALCO and Hindalco slumped between four per cent to11 per cent.

Another prominent loser was ITC ending two per cent lower after the tobacco major decided to shut its plants from May 4 to comply with a new stipulated pictorial warnings rule issued by the federal government.

On the flip side, HDFC surged seven per cent on posting net profit of Rs 2,607 crore for the quarter ended March (Q4FY16), up 40 per cent year-on-year (y-o-y).

Other gainers in the Sensex pack include GAIL, NTPC, BHEL, L&T and Maruti Suzuki ending higher between one per cent to seven per cent.

WEEK AHEAD

Trend in global markets, FII stance, the movement of rupee and crude oil price will set the tone for the markets in the coming week.

HUL, Zee Entertainment Enterprises, Kotak Mahindra Bank, Asian Paints, Nestle India, Glenmark Pharma, Cadila Healthcare among others will announce their quarterly results next week.

Meanwhile, government is scheduled to unveil industrial production data for March and the consumer price index (CPI) data for April 2016 on Thursday.

Also, participants will watch out for the US nonfarm payroll data for April 2016 due to be released on Friday, 6 May 2016.

On the global front, the Bank of England (BOE) monetary policy committee members will vote on where to set the rate and Germany's Q1 Gross Domestic Product (GDP) data will be unveiled on Friday, 13 May 2016.

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