Corporate earnings for the March quarter and elections are expected to be key drivers of equity markets in this truncated week. Indian markets are shut for trading on Wednesday and Friday. Most analysts expect volatility in the markets is likely to continue till general elections are over.
Jimeet Modi, Founder and CEO, SAMCO Securities & StockNote, said the current corrective phase in the markets has just begun and it may last till the middle of May, however, the undertone of the market will not be weak. "The amount of price correction would be difficult to estimate but the markets will take their own time till May to correct. The markets are witnessing a whipsaw phase where neither the bulls nor the bears could make headway during the week. This is typically a corrective phase which the markets are undergoing after witnessing a strong rally. Statistically, similar such corrections in the past have taken around a month’s time."
As India is set to see a new government post elections, analysts and investors will be keenly watching out for commentary and guidance by companies, which are expected to be indicative of economic and business growth. The surge in crude oil prices in the January-March period is expected to further delay a recovery in corporate earnings.
While private banks, cement and utilities, which have been a drag on earnings, are likely to post good numbers, the performance of former champions such as metals, auto, retail, and fast-moving consumer goods (FMCG) is likely to moderate in Q4FY19, Edelweiss Securities Ltd said in a 5 April note.
Major companies that will declare Q4 earnings this week are Reliance Industries, Wipro, HDFC Bank, RBL Bank, Mindtree and ICICI Lombard General Insurance.
This week investors are likely to react to TCS and Infosys stocks as the IT majors announced their March quarter earnings after market hours on Friday. Infosys reported a mixed bag in Q4FY19, with margins below expectations even as revenue was in-line. For the full year FY19, Infosys has posted 9% revenue growth in constant currency terms versus a guidance of 8.5- 9% and EBIT margin of 22.8% versus guidance of 22-24%. It has provided 7.5-9.5% growth guidance and has lowered its margin guidance by 100 basis points (bps) to 21-23% for FY20 – both lower than the street’s expectations. Analysts believe that lower-than-expected growth and margin guidance may lead to a cut in street’s earnings estimates.
“We believe Infosys is being conservative in terms of its revenue guidance for FY19, given that YoY constant currency growth was 11.7% in Q4FY19, with robust order wins also reflecting underlying revenue strength," Reliance Securities Ltd said.
TCS ended FY19 with full-year constant currency (CC) revenue growth of 11.4% YoY, EBIT margin of 25.6% and net income growth of 22.5% YoY.
Meanwhile, in the primary markets diagnostics chain Metropolis Healthcare Ltd will make its stock market debut on Monday. The ₹1,204-crore initial public opening (IPO) with a price band of ₹877-880 was subscribed 5.84 times during the share sale 3-5 April. It is an offer for sale and the company will not receive any funds raised from the issue.