Indian Markets Outlook for the week – 25 to 29.05.2015

Indian Markets Outlook for the week – 25 to 29.05.2015
 Jan-Mar earnings, expiry to be key next week
With an action packed week ahead as many Nifty companies are scheduled to release their Jan-Mar earnings and the US will releases its economic growth data, share indices are seen moving within a range, but may also witness volatility due to expiry of May derivatives expiry on Thursday. Data on the US economic growth for Jan-Mar and housing starts for April will be looked at next week. While the data from the US may impact the market, its affect will be less than of local factors.

With the May derivatives contract expiring on Thursday, the market is likely to be volatile over the week as traders rollover their positions to the June series. The Nifty ended up 0.4% at 8458.95 points while S&P BSE Sensex ended at 27957.50 points. Public sector banks are seen weak, especially after State Bank of India reported its Jan-Mar earnings. In the immediate term banks, especially public sector banks, will perform poorly as SBI was a
sentimentally strong result. In the long term we see SBI as a good stock as asset quality would improve with better macro environment.

State Bank of India reported a net profit of 37.42 bln rupees for Jan-Mar against estimates of 36.72 bln rupees. The bank also reported a 70 bps decline in its gross non-performing assets ratio, with its gross NPAs falling to 567.25 bln rupees from 619.91 bln rupees as of the end of December. However, the bank sold 45.10 bln rupees of assets to asset restructuring companies, which the equity markets took as an explanation for the reduction in NPA ratio. Stock prices of the company declined 2.7% to 282.45 rupees.

Large-cap information technology stocks are also likely to do well while mid-caps are seen subdued, due to the steady depreciation in the rupee. Tech Mahindra, Tata Motors, Bharat Heavy Electricals, Coal India, Hindalco Industries, NMDC, Oil and Natural Gas Corp, Power Grid Corp of India, Cipla, Mahindra and Mahindra, Sun Pharmaceutical Industries and Larsen & Toubro are the Nifty companies reporting their earnings next week. Bosch, which will be included in the Nifty on May 29 at the expense of IDFC, will be reporting its Jan-Mar earnings on the same day. Other companies reporting their Jan-Mar earnings next week are Glenmark Pharmaceuticals, Jindal Steel and Power, ABG Shipyard, Ipca Laboratories, Bank of India, United Spirits, and United Breweries, among others