Budget expectations, earnings, coronavirus to drive stock market this week

Earnings from major companies such as HDFC, US Fed's interest rate decision and hopes of positive measures from the Budget would drive sentiment in the equity markets this week which may also witness volatile sessions amid derivatives expiry, according to analysts.

Participants would also keep an eye on the spread of the deadly coronavirus in China and other countries, they added. The lethal virus has claimed 56 lives in China, and spread to about a dozen nations.

"Going ahead, markets are likely to be volatile due to monthly F&O expiry just ahead of the Union Budget that would be presented towards the end of the elongated week. Also, stock-specific action is likely to continue with the ongoing results season which has been mixed so far. Apart from these, investors would also watch out for the US Fed and Bank of England's monetary policy," Motilal Oswal Financial Services, Head - Retail Research, Siddhartha Khemka said.

He added that on the macro front, US Q4 GDP and India's fiscal deficit data would be released. Further, heavyweights like SBI, HDFC, HUL and Maruti Suzuki would be announcing their results this week which would also keep markets busy.

"The Q3 result had solid expectations but actual results are marginally below expectation for sectors like IT and banks, leading to cautiousness in the market. We feel that this cautious trend will be maintained in the near-term since a lot has been factored in about Budget wish-list and expectation of revival in earnings growth, but the actual Q3 results (has been) below par.

"Going ahead, market direction will depend on the actual Budget announcements and performance of Q3 result. Week ahead is eventful with Union Budget, US Fed and BoE policy meets," said Vinod Nair, Head of Research, Geojit Financial Services.

The US Fed interest rate decision is scheduled for Thursday.

"This week will be dominated by Union Budget but global cues and Q3 results will also have some impact on the market. Coronavirus is a key worry for the global markets because if the situation becomes worse from here then it could result in short-term slowdown in the global economy. In terms of earnings, ICICI Bank will react to its Q3 results on Monday whereas HDFC Ltd, Maruti, Bajaj Auto will be the key earnings for this week," Santosh Meena, Senior Analyst, TradingBells said.

ICICI Bank on Saturday reported an over two-fold rise in its consolidated net profit at Rs 4,670 crore for the December quarter, helped largely by the Essar Steel recovery and a jump in its core income.

Markets would also track rupee-dollar trend and Brent crude oil movement.

During the week gone by, the Sensex shed 332.18 points or 0.79 per cent.

"The expectations are high from the Budget as market participants pin hopes for additional measures from the government to revive the economy. This is likely to drive momentum in the markets in the coming sessions. Further, the earnings announcement from corporates would also induce stock-specific volatility," said Ajit Mishra, VP - Research, Religare Broking Ltd.

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