September quarter earning to guide markets

IIP, export-import data, FOMC meet minutes to be keenly watched too

As trading activity resumes on Tuesday, following a five-day break, companies’ earnings for the quarter ended September this year might take centre stage. Infosys will kick-start the September quarter earnings season, announcing its results on Friday.

Experts said now, investors might increase exposure to technology stocks, as typically, these were the first to announce results. “The companies with better numbers are always the ones to announce their results first. People will start by betting on IT companies first, as these have had a good quarter, and then move to other sectors, as and when the results are announced,” said U R Bhat, managing director, DaltonCapital.

Tata Consultancy Services, Tech Mahindra and Persistent Systems are expected to post good earnings, owing to strengthening of the dollar, higher exports and strong order books. Automobile, cement and oil & gas companies are also expected to post good numbers. This week, data on the Index of Industrial Production for August and export figures for September will be released. Also, the US Federal Reserve is likely to release minutes of its FOMC meeting.

Going into the five-day break amid the growing unrest in Hong Kong and the Reserve Bank of India sticking to its anti-inflationary stance, nervous investors had carried fewer positions. However, the unemployment rate in the US touching a six-year low and the Hong Kong authorities and protestors beginning negotiations over the weekend have soothed nerves. On Monday, major European indices rose on hopes weak economic growth could see the European Central Bank providing more stimulus.

Most Asian stock indices — in China, Indonesia, Singapore, Malaysia and West Asia — are closed. “These indices have come up after having been on the decline through the past three-four days. For the Indian market, we could expect some correction. A near-term 200-point dip in the Nifty could be a good buying-opportunity,” says Piyush Garg, executive vice-president, ICICI Securities.

Experts say the Indian markets might continue to trade between 7,850 and 8,050, with a downward bias. “Technically, with the Nifty in a downtrend, traders will need to watch for a break below the immediate support of 7,842 for a continuation of the downtrend. Any pullback rallies could find resistance at 8,019-8,042,” said a HDFC Securities client note.