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Indian markets could come under pressure following a sell-off on Monday in the European and emerging markets (EMs) amid worsening tensions in Ukraine. The Street will keenly watch inflation data and fourth quarter numbers to be announced by several companies which are part of the benchmark indices. The market on Friday had ended with losses following selling by foreign investors, ahead of a truncated trading week. Indian markets were closed on Monday and will again remain shut on Friday on account of a holiday.
On Monday, most Asian and European markets fell as much as one per cent after Russia called an emergency session of the United Nations Security Council as clashes between Ukrainian forces and pro-Russian gunmen turned deadly. Nifty derivatives traded on Singapore's SGX had opened weak on Monday.
Global tensions are also likely to put pressure on the rupee against the dollar. The inflation data, if worse than market expectations, could also have a negative impact on stocks and currencies, said experts.
Information technology stocks, which saw a bout of selling last week, will be under the spotlight as the four IT giants declare their fourth-quarter earnings. Infosys will be the first off the blocks on Tuesday, followed by Tata Consultancy Services and Wipro on Wednesday and HCL Technologies a day later.
“Markets are already expecting subdued numbers from IT companies because of rupee appreciation in the January-March quarter as well as lower demand from the US markets. Selling in IT stocks could resume if the numbers turn out to be lower than expected,” said Daljeet Singh Kohli, head (research), India Nivesh Securities.
Experts say the Nifty could find support at 6,740, while the resistance could be at 6,820. “Upside acceleration is likely once the Nifty crosses the 6,820 resistance,” said a note by HDFC Securities.
The recent surge in the market is a reason for caution for some experts. “There is no logic to the movement in the market. The exuberance in the market cannot be justified. Only hope is being played up,” said Dhananjay Sinha, co-head (institutional research), Emkay Global Financial Sevices. Even the inflation figures to be released next week are unlikely to move the markets in a meaningful way, he said.
Besides the IT companies, private sector lender IndusInd Bank and index heavyweight Reliance Industries are expected to announce their March earnings this week.
Reliance Industries is expected to post muted Q4 numbers, analysts said. “Markets are not expecting very spectacular numbers. There may be some profit-booking in the stock, ahead of the results,” said S P Tulsian, an independent stock market analyst.
