Market Ahead, May 11: Top factors that could guide markets this week

The Indian equity markets declined over 6 per cent last week but might start this one strongly as indicated by the SGX Nifty, which is trading over 100 points higher at 9,350 levels.

There are a hosts of domestic and global cues investors will track through the week, so let's get down to it.

This week, investors will first react to ICICI Bank's results. The private sector lender reported an 82 per cent jump in pre-tax profit and a 26 per cent rise in net profit to Rs 1,221 crore in the March quarter. The bank, however, missed Street estimates because of higher provisioning for the coronavirus pandemic.

The earnings announcement will pick up pace this week. Around 50 companies including the likes of Maruti Suzuki, Nestle, Dr Reddy's Labs, Biocon, and Bandhan Bank are scheduled to announce their March quarter results.

On the macro front, industrial production data for March and CPI inflation for April will be released on May 12 and WPI inflation will be out tomorrow.

The trend in coronavirus cases will also impact sentiment. The number of coronavirus cases jumped to 67,161 in India and the death toll rose to 2,212 on Sunday. Globally, over 41 lakh people have been infected.

In that regard, markets will also watch out for any further extension of the lockdown beyond May 17 as well as the extent of relaxations announced. For now, the government has said that 15 set of trains will be started from tomorrow and the booking for the same will begin from today. This is also expected to positively impact IRCTC's stock in today's session.

Investors will also look out for any announcement on economic stimulus. To that end, the government announced on Friday that it was increasing borrowing limit to Rs 12 trillion for FY21 against the budgeted Rs 7.8 trillion. Analysts say while this move will widen the Centre’s fiscal deficit sharply, it will also help the government get the funds to spur the sagging economy.

Besides, India is likely to set a 10 per cent ‘beneficial ownership’ cap for foreign direct investment flowing from seven bordering countries including China. Moreover, a government nod would be required for any investing entity or individual from these nations.

In company-specific news, Reliance Industries has fixed May 14 as the record date to determine shareholders eligible to apply for India's biggest rights issue worth Rs 53,125 crore.

Globally, the US-China trade relations and oil prices will be major triggers for the markets. On Monday, Asian shares climbed higher in early deals as investors looked ahead to more countries restarting their economies, even as some reported an unwelcome pick up in new coronavirus cases.

In South Korea, coronavirus infections rebounded to a one-month high, while new infections accelerated in Germany. Still, investors seemed determined to stay optimistic and MSCI’s broadest index of Asia-Pacific shares outside Japan firmed 0.1 per cent. Japan's Nikkei added 1.6 per cent and South Korean stocks were up 0.4 per cent.

Read by: Kanishka Gupta