Quarterly Earnings, Crude Prices, Geopolitical Volatilities To Drive Markets This Week, Say Analysts

Analysts noted that a muted start to the result season by IT sector’s dampened revenue guidance, along with a surge in crude oil prices impacted the broad market trend.

Fluctuations in the oil benchmark Brent crude, current second quarter earnings season, and uncertainty in the Middle East are some factors that will drive domestic markets this week, analysts said. Additionally, market experts stated that trading activities of foreign institutional investors (FIIs) would also impact the markets in the week. 

Santosh Meena, head of research at Swastika Investmart Ltd, noted, “A slew of earnings reports from heavyweights expected this week will significantly impact market direction. The activities of Foreign Institutional Investors (FIIs) will be important, given their recent consistent selling streak,” as reported by PTI. 

Notably, foreign investors have so far in the month taken out almost Rs 9,800 crore from Indian stock market due to a sustained increase in US bond yields and the volatile environment due to the Israel-Hamas conflict. Markets also exhibited extreme fluctuations in a highly volatile last week. However, domestic equities market managed to close the week on a positive note due to strong domestic liquidity. The BSE benchmark climbed 287.11 points or 0.43 per cent in last week. 

Vinod Nair, head of research at Geojit Financial Services, said, “The Indian market rebounded from the sluggish start, propelled by positive expectations on Q2 earnings and moderation in global bond yield despite concerns over the Middle East conflict continues to hover. However, the release of higher-than-anticipated US inflation data and resulting increase in treasury yields marginally offset the positive trend by the end of the week.”

On the domestic front, macroeconomic indicators such as a massive decrease in Consmer Price Index (CPI) data and strong industrial production data helped maintain ‘broad optimism’, Nair said. 

The country’s retail inflation rates moderated to a three-month low of 5 per cent in September, while factory output climbed to a record 14-month high of 10.4 per cent. However, a muted start to the result season by IT sector’s dampened revenue guidance, along with a surge in crude oil prices impacted the broad market trend, Nair added. 

Providing an outlook, Nair said that investors would closely observe the second quarter earnings season, where experts have high expectations from sectors like auto, finance, oil and gas.

Additionally, the speech by the US Fed Chair Jerome Powell towards the end of the week on October 19 would be a key factor as the Federal Reserve remains in favour of one more rate hike by the end of this year to control inflation, the report noted.