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In the absence of fresh domestic triggers, any development in the US over the weekend on the standoff between Republicans and Democrats over new budget and debt ceiling is likely to lend direction to the equity market next week. The US entered its fourth day of partial shutdown as lawmakers could not reach an agreement on the spending bill. Market participants are cautious as they believe the US budget impasse may have an impact on discussions about raising the debt ceiling on Oct 17. The US government is due to hit its borrowing limit on Oct 17, before which political parties must reach a consensus over spending or face a sovereign debt default. Investors will also eye the release of minutes of the September US Federal Open Market Committee meet on Wednesday. On Sep 17-18, the US Federal Reserve had defied market expectations and decided not to begin scaling back its $85-bln monthly asset purchase programme. A section of the market believes local equities are likely to trade with a positive bias, while another section of the market expects indices to be pressured. We expect the market to trade with a negative bias next week, led by losses in stocks of banks and capital goods makers. The market has already discounted the fact that the US Fed will taper its bond-buying programme in 2014 and not at the next FOMC meet scheduled for Oct 29-30. Yesterday, the National Stock Exchange's 50-share Nifty, which briefly topped the crucial 5950-mark, ended below that level, after India's HSBC Services Purchasing Managers Index fell to a four-and-a-half-year low of 44.6 in September. Nifty ended flat at 5907.30, down 2.40 points from close Thursday. Intraday, the index hit a low of 5885.00 and a high of 5950.45. The S&P BSE Sensex ended at 19915.95, up 13.88 points or 0.1%. The index touched a low of 19833.17 and a high of 20052.00 during the day. MCX Stock Exchange's SX40 ended at 11852.38, down 0.89 points after moving between 11815.99 and 11933.32 intraday. Back home, focus will be on Infosys, as the information technology major will kick-start the earnings season by detailing its Jul-Sep earnings on Oct 11. We expect the company to post robust earnings on the back of rupee depreciation. However, we don't expect the scrip to raise more than 4-5% in the event of good numbers, as that has largely been priced in. In the event of disappointing earnings, the scrip can fall to 2,920 rupees. Yesterday, the stock ended 0.7% lower at 3,016.40 rupees. We expect the information technology companies to show good results for Jul-Sep. We expect Tech Mahindra and Tata Consultancy Services to post better numbers as compared to Infosys. Market is also likely to take cues from the release of Index of Industrial Production data for August on Oct 11. We expect the data to be disappointing on the back of weak macroeconomic conditions. Among sectors, stocks of pharmaceutical, automobile, and private banks are expected to gain next week. Bank Nifty is seen moving in the range of 9970-10500, with YES Bank and HDFC Bank likely to lead gains. Public sector banks are unlikely to participate in the expected rally.
In the absence of fresh domestic triggers, any development in the US over the weekend on the standoff between Republicans and Democrats over new budget and debt ceiling is likely to lend direction to the equity market next week. The US entered its fourth day of partial shutdown as lawmakers could not reach an agreement on the spending bill. Market participants are cautious as they believe the US budget impasse may have an impact on discussions about raising the debt ceiling on Oct 17. The US government is due to hit its borrowing limit on Oct 17, before which political parties must reach a consensus over spending or face a sovereign debt default. Investors will also eye the release of minutes of the September US Federal Open Market Committee meet on Wednesday. On Sep 17-18, the US Federal Reserve had defied market expectations and decided not to begin scaling back its $85-bln monthly asset purchase programme. A section of the market believes local equities are likely to trade with a positive bias, while another section of the market expects indices to be pressured. We expect the market to trade with a negative bias next week, led by losses in stocks of banks and capital goods makers. The market has already discounted the fact that the US Fed will taper its bond-buying programme in 2014 and not at the next FOMC meet scheduled for Oct 29-30. Yesterday, the National Stock Exchange's 50-share Nifty, which briefly topped the crucial 5950-mark, ended below that level, after India's HSBC Services Purchasing Managers Index fell to a four-and-a-half-year low of 44.6 in September. Nifty ended flat at 5907.30, down 2.40 points from close Thursday. Intraday, the index hit a low of 5885.00 and a high of 5950.45. The S&P BSE Sensex ended at 19915.95, up 13.88 points or 0.1%. The index touched a low of 19833.17 and a high of 20052.00 during the day. MCX Stock Exchange's SX40 ended at 11852.38, down 0.89 points after moving between 11815.99 and 11933.32 intraday. Back home, focus will be on Infosys, as the information technology major will kick-start the earnings season by detailing its Jul-Sep earnings on Oct 11. We expect the company to post robust earnings on the back of rupee depreciation. However, we don't expect the scrip to raise more than 4-5% in the event of good numbers, as that has largely been priced in. In the event of disappointing earnings, the scrip can fall to 2,920 rupees. Yesterday, the stock ended 0.7% lower at 3,016.40 rupees. We expect the information technology companies to show good results for Jul-Sep. We expect Tech Mahindra and Tata Consultancy Services to post better numbers as compared to Infosys. Market is also likely to take cues from the release of Index of Industrial Production data for August on Oct 11. We expect the data to be disappointing on the back of weak macroeconomic conditions. Among sectors, stocks of pharmaceutical, automobile, and private banks are expected to gain next week. Bank Nifty is seen moving in the range of 9970-10500, with YES Bank and HDFC Bank likely to lead gains. Public sector banks are unlikely to participate in the expected rally.
