NEW DELHI: Geopolitics returns to haunt markets this week after the US and allies launched air strikes on Syria over the weekend, raising Middle East tensions, which have the potential to trigger a major spike in crude oil price.
Good times for the bulls continued for the bulls on Dalal Street for the third week in a row, as both headline indices went home with handsome gains. The S&P BSE Sensex added 565 points, or 1.68 per cent, for the week gone by to settle at 34,192, while the broader Nifty50 climbed 149 points, or 1.44 per cent, to 10,480.
The domestic market ended higher for a seventh straight session on Friday, marking its longest winning streak since November 2017.
Among key highlights, Lemon Tree Hotels, India's largest hotel chain in the mid-priced hotel sector, made a decent market debut as the scrip got listed at Rs 61.60, a 10 per cent premium over the issue price of Rs 56.
IT bellwether Infosys on Friday announced its first full quarter numbers under new CEO Salil Parekh. The figures were pretty much in line with Street expectations.
Going forward, besides geopolitical developments, Q4 earnings and domestic politics will keep investors on the edge.
Apart from the ongoing geopolitical concerns and earnings seasons, the market will now keep an eye on the forthcoming Karnataka state elections. Any new development on that front will affect market swings, said Gaurav Jain, Director, Hem Securities.
Karnataka assembly election will take place on May 12 and the results will be out on May 15.
Let's check out what else may matter to the market in the coming week :-
March quarter earnings
Corporate earnings will take the centrestage in the weeks ahead as some of the index-heavyweight companies are scheduled to release their quarterly numbers. ACC will declare its March quarter numbers on Wednesday, April 18, while IndusInd Bank and IT major TCS will unveil theirs on Thursday, April 19. Other notable earnings during the week will be that of Crisil, Mindtree, Cyient, HDFC Life and Tata Sponge. Private lender HDFC Bank will announce its numbers on April 21, 2018.
Air strikes on Syria
US, British and French forces struck Syria with more than 100 missiles on Saturday in the first coordinated western strikes against Damascus, targeting what they said were chemical weapons sites in retaliation for a suspected poison gas attack. Last week, at least 60 people were killed and more than 1,000 injured in suspected chemical weapons attack on the town of Douma, according to a Syrian relief group. US President Donald Trump announced the military action from the White House, saying the three allies had “marshalled their righteous power against barbarism and brutality," Reuters reported. The domestic equity market may see some knee-jerk reaction, along with the rest of the world, to the attacks, when trading resumes on Monday.
What do the tech charts say?
The Nifty50 index formed a Spinning Top candle on the daily chart on Friday, suggesting that the bulls are seeing strong resistance at higher levels. Sameet Chavan of Angel Broking said given the recent development on select heavyweight counters, the Nifty50 may take the ongoing upmove towards 10,580-10,640. However, the US air strikes on Syria are likely to have a bearing on the market. “Though we remain little overstretched on the daily charts, we expect the market to remain largely resilient to any major downside in the coming week,” said Milan Vaishnav, CMT, MSTA.
Possible spike in crude prices
The long era of too much oil sloshing around the world and low prices is coming to an end, just as global events are heating up crude prices, CNBC reported. Oil prices rose on Friday, making the largest weekly gain since July. Both the benchmarks, Brent crude and US WTI settled 8 per cent higher for the week. Pashupati Advani of Global Forays said rising crude prices is the biggest headwind for the Indian market. “The biggest concern that I see is the rising oil prices and it looks like the Saudis want to take the oil to $80 a barrel. This will lead to tough times for us because every dollar costs our country $3 billion a month or so,” he said.
Macro numbers to have a bearing
Inflation data based on wholesale price index (WPI) for March 2018 are slated to release on Monday, April 16. Wholesale prices rose by 2.48 per cent year-on-year in February 2018, after a 2.84 per cent increase in the prior month. Indias annual wholesale price inflation eased for the third straight month in February after touching an eight-month high in November. This apart, investors may also factor in trade deficit data that came on Friday. The trade deficit for FY18 soared to a five-year high on rise in imports. Exports declined nearly one per cent in March after four months of rise to $29.1 billion from $29.3 billion a year ago, data released by the government showed.
Shares of Infosys may hog the limelight as the IT major announced its March quarter results on Friday post market hours. The company's revenue from operations came in at Rs 18,083 crore for January-March as against Rs 17,794 crore in the December quarter. It posted a 28.2 per cent drop in sequential net profit at Rs 3,690 crore for the quarter to March against Rs 5,129 crore in the preceding quarter. This apart, UCO Bank may also remain in focus. CBI has booked former UCO Bank CMD Arun Kaul and others for allegedly cheating the bank to the tune of Rs 621 crore, PTI reported on Saturday.
IMF, WB spring meetings
The IMF and World Bank Spring Meetings will kick off next week against a backdrop of concern that a US-China trade spat can hurt the world economy already losing momentum after a strong 2017, Reuters reported. IMF chief Christine Lagarde had said in February the global economy was showing broad-based growth but warned the landscape was shifting, with heightened risks of trade disputes, monetary policy normalisation and technological change.
Other global cues
On the global front, China is slated to release its Q1 GDP annual growth rate on Tuesday, April 17. China's economy grew 6.9 per cent in 2017, ending the year on a positive note as official figures topped the government target of around 6.5 per cent, CNBC reported. In addition, Japanese industrial production data for February will be declared on Tuesday, April 17. Japanese inflation data for March will be announced on Friday, April 20.