BackMarkets may remain weak as earnings season begins, TCS shares in focus
TCS shares will be in focus today as it is expected to announce its June quarter earnings later in the dayAsian stocks struggled to rebound today
PremiumMUMBAI : Indian stock markets are likely to stay under pressure on Tuesday as tax proposals in the Union Budget unnerved investors while global markets are also in a downtrend. Markets are expected to shift focus to June quarter corporate earnings that begin today.
Asian stocks struggled to rebound on Tuesday as investors came to terms with sharply reduced expectations that the Federal Reserve will deliver a large interest rate cut at the end of July.
MSCI’s broadest index of Asia-Pacific shares outside Japan ticked up 0.1% in early trade, after falling 0.6% the previous day. Japan’s Nikkei rose 0.5% thanks in part to the yen’s retreat against the dollar. On Wall Street, the S&P 500 lost 0.48% while the Nasdaq Composite dropped 0.78%, led by fall in Apple Inc.
Investors’ focus is shifting to Fed Chairman Jerome Powell’s testimony before Congress later in the week for clues on monetary policy.
Back home, Tata Consultancy Services Ltd (TCS) will be in focus today as it is expected to announce its June quarter earnings later in the day. Q1FY20 is likely to be significantly weak for information technology (IT) companies as profit is likely to grow marginally compared to the double-digit spurt in FY19. Wage hikes, high attrition, visa costs and a strong rupee are expected to keep margins under pressure, which is estimated to fall 60-200 basis points (bps) for the top five IT companies. In the year so far, the rupee has strengthened 2% against the dollar.
Ahead of the monetary policy review on 7 August, Reserve Bank of India (RBI) governor Shaktikanta Das on Monday praised the government’s commitment to fiscal consolidation in the Budget, raising hopes for a fourth consecutive policy rate cut next month.
Watch: 3 major concerns for stock markets post Budget
In her maiden budget, finance minister Nirmala Sitharaman stuck to the path of fiscal consolidation, promising to reduce fiscal deficit to 3.34% of GDP in FY20 from 3.37% of GDP in FY19.
In the currency market, fading expectations of aggressive easing by the Fed helped the dollar.
The euro traded at $1.1215, near Monday’s low of $1.1207, its weakest level since June 19.
The dollar changed hands at 108.75 yen, having risen up to 108.81 yen in the previous session, its highest in more than a month. The British pound stood at 1.2518, not far from six-month lows of $1.2481 touched on Friday.
Oil prices were slightly softer as concerns about whether slowing global economic growth would hit oil demand eclipsed tensions over Iran’s nuclear program. Brent crude futures fell 23 cents, or 0.36% to settle at $63.88 a barrel. US West Texas Intermediate (WTI) crude futures shed 19 cents, or 0.33% to settle at $57.47 a barrel.
(Reuters contributed to the story)
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