Mkt course hinges on Q4 earnings

Mumbai: BSE Sensex was up by 0.48 per cent on the closing hours of Friday and it closed at 61,729.68 on the day. The Indian equity markets remained volatile though with an upward bias for the week ended May 19.

On key trend emerging is that foreign institutional investors have turned net buyers of Indian equities. So far in FY24, net FII inflows stood at $3 billion so far, this fiscal against outflows of $17 billion and $6 billion in FY22 and FY23 respectively.

The US Federal Reserve hiked the target range for the Federal Funds rate by 25 bps to 5-5.25 per cent during its May meeting. The decision took in to account the modest pace of economic activity in 1QCY23, robust job gains in recent months, a low unemployment rate, and persistence of elevated inflation. However, globally and in India, inflation has started to ease. April CPI inflation in India moderated to 4.7 per cent vs 5.6 per cent in March.

“The domestic Q4FY23 corporate earnings season is underway and so far results have been largely in line with estimates driven by sectors such as banking, automobiles and cement. Margins have started to improve sequentially with the correction in commodity prices. FY24 Nifty earnings estimates have been stable. Earnings growth continues to be led by domestic facing sectors,” said Shibani Sircar Kurian, Senior EVP & Head- Equity Research, Kotak Mahindra Asset Management Company.

With markets trading close to long term average valuations, earnings delivery is likely to be crucial for the markets going forward.

Further, rural wage growth appears to have bottomed out and has hovered around 6 per cent YoY levels for the past six months. One key monitorable for rural demand would be trajectory and dispersion of monsoons especially given the fear of El-Nino.