Markets Next Week: Quarterly Numbers Hold The key

Benchmark indices have rallied as much as 45 per cent from lows seen in the month of March. Much of the rally has been attributed to record highs of stocks like Infosys and Reliance Industries. A large part of the the participation has been from the IT pack and Reliance Industries.

As we head into the next week, earnings would hold the key to market movement.

Heavyweights from financial sector to declare results:

A host of large banks, HFCs, insurance companies and asset management companies from the financial sector will declare their results next week.

These include names like Bajaj Finance, ICICI Bank, Bajaj Finserv, Axis Bank, PNB Housing Finance, ICICI Prudential Life Insurance Company, HDFC Asset Management Company etc.

Individual companies will react to their numbers and any surprise in earnings from these companies would help improve sentiments. The banking and finance sector has the highest weightage and good numbers can lift sentiments. Investors would watch for slippages, provisions and management commentary, given that the quarter is the worst quarter for corporates given the lockdown.

Apart from this heavyweight FMCG companies like HUL and ITC, which have a decent weightage in the Nifty would also announce their quarterly results. Investors would watch for volume growth, and demand commentary from the management of some of the FMCG companies. Rural demand for some of them could help salvage the quarter.

Rising covid-19 infections a worry:

The rising infections from covid-19 would also keep the markets on tenterhooks. On Saturday, India reported a record number of infections and any fresh lockdowns in select cities and states can have an impact on the markets.

The Indian Medical Association (IMA) has said the country now shows community transmission of COVID-19 has started and the situation looks bad.

Global cues remain important:

However, global cues would be a key for the markets. It's important to remember that most markets have seen significant rally from the lows and hence a decent correction is possible.

In India, the markets have rallied on the back of a few heavyweights. For the momentum to sustain banking stocks would need to fire. Hence, numbers from the banking space next week would be key to a market upswing. Volatility is here to stay, though, we would advise against taking fresh positions, given the sharp one way rally in the last six weeks.