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Weekly Indian Sector Outlook -24.10.2016 - .28.10.2016

Weekly Indian Sector Outlook -24.10.2016 - .28.10.2016

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 Indian Market Outlook for the week – 24 to 28.10.2016
(Volatile next week; Jul-Sep earnings in focus)


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Weekly Indian Sector Outlook -24.10.2016 - .28.10.2016


The stock indices are expected to be volatile next week due to expiry of the October
derivative series and because several companies are scheduled to detail their earnings
for Jul-Sep. As many as 21 companies that are part of the Nifty 50, including Bharti
Airtel, Axis Bank, Housing Development Finance Corp, ITC, Hindustan Unilever and
Maruti Suzuki India will announce their Jul-Sep earnings next week.

The expiry of October derivatives contracts might accentuate the volatility next week,
as buyers are likely to remain cautious due to geopolitical Uncertainties, and also
because most corporate earnings announced so far have been disappointing. As long as
there is ample liquidity and bond yields are low, the markets will remain broadly
positive, even as they are likely to consolidate next week.

The risk of capital flight from emerging markets such as India in case of any
unexpected global event would weigh on sentiment. Though volatility will persist,
market participants do not expect any major fall in indices. The Nifty 50 is likely to find
support at the 8540-mark. The Banking stocks will continue to outperform the
benchmark indices. This week, the Nifty Bank index gained 3.6%, registering the
highest weekly gains among all NSE sectoral indices. Chances of a positive surprise in
Jul-Sep earnings from banks are quite high.

In the short term, private sector banks with exposure to corporate business are also
likely to do well because their provisioning looked better now. However, shares of
Wipro are expected to fall on Monday because the company reported below-par
earnings for Jul-Sep. Also, its sales guidance for Oct-Dec was weak. On a sequential
basis, Wipro's consolidated net profit for Jul-Sep rose a mere 1% to 20.7 bln rupees,
while net sales rose only 1.4% to 138.9 bln rupees.