Market Ahead podcast, April 12: Factors that could guide markets this week

The domestic markets ended last week with moderate losses, bogged down by concerns over rising Covid-19 cases and strict curbs to curtail the spread of the virus while RBI's dovish policy stance helped contain the downside.

Going into trade in the truncated week, while investors will keep a watch on the pace of Covid infections and vaccination drive, the March quarter earnings season will take centre stage. Besides, macro data and global cues are also likely to guide the market direction.

The March quarter earnings season will begin this week with 21 companies slated to announce their results including large-cap names such as TCS, Infosys and Wipro from the IT sector and HDFC Bank from the banking space. Overall, while the expectations are high of a strong quarter on the back of a deflated base of Q4FY20 and healthy demand recovery, the market will keenly track the management commentary on FY22 for further cues.

That apart, investors will keep an eye on the pace of Covid-19 infections and the inoculation programme as the country struggles to deal with the second wave of the coronavirus. In the last 24 hours, India reported the highest single-day spike with 1.7 lakh new Covid cases. Amid a surge in the cases, several states have imposed weekend lockdowns, night curfews and strict restrictions to control the pace of infections.

This week is also important to watch out for in terms of macroeconomic data points as industrial production for February and CPI inflation for March will be released on Monday, while WPI inflation for March will be announced on Wednesday.

Lastly, Indian markets are likely to track global cues and the weakening rupee which has depreciated more than 2% along with oil price movement and FII flows.

And now, let's take a look at the trade setup for today.

Asian shares started cautiously on Monday as investors wait to see if US earnings can justify sky-high valuations, while bond markets could be tested by what should be very strong readings for US inflation and retail sales this week.

MSCI’s broadest index of Asia-Pacific shares outside Japan was off 0.05% in slow early trade. Tokyo’s Nikkei edged up 0.1%, while South Korean stocks rose 0.2%.

Tracking Asian cues and amid concerns over fast-rising covid cases, Indian markets eyed a gap-down start to the week with the SGX Nifty ruling 146 points or 0.96% lower at 14,726 around 7.40 am.

On the stock-specific front, Tata Consultancy Services, HDIL, California Software, Cupid Trades & Finance and Lloyds Metals and Energy will announce their quarterly earnings on April 12. 

Analysts expect TCS to post 9 per cent YoY growth in March quarter revenue aided by certain large deals such as Postbank and Prudential Financial, ramp-up in multiple $50-100 million deals won in the preceding quarter, and strong demand in areas of cloud and customer experience.

Infosys on Sunday said its board will consider a buyback proposal at its meeting on April 14.

UTI Mutual Fund acquired 1.77% equity stake in casual dining restaurant chain operator Barbeque Nation via open market operations on April 8, taking its total shareholding in the company to 5.01%.

Castrol India has entered into an exclusive supply arrangement with ki Mobility Solutions in India wherein Castrol will supply lubricant products to ki Mobility's multi-brand workshops.

Balrampur Chini Mills on Saturday said its board has approved a higher investment of Rs 425 crore for a new distillery plant of 320 kilolitres per day (KLPD), which is expected to commence by December 2022.