GST sub-rates, earnings results to influence equity markets

By Rohit Vaid

Mumbai, May 14 (IANS) Clarity on GST sub-rates along with ongoing quarterly results season and a firm rupee are expected to influence investors' sentiments in the equity markets, market observers have opined.

According to analysts, the outcome of the GST Council's meet, slated to be held on May 18-19 in Srinagar, will be a "crucial determining" factor for indices' movement during the week commencing May 15.

The council, chaired by Finance Minister Arun Jaitley, is scheduled to finalise the sub-rates of different commodities and services. The single tax regime on the supply of goods and services is proposed to be rolled out on July 1.

"Going ahead, market performance is expected to be determined by the earnings trajectory and the implementation of GST," D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors, told IANS.

"The market is expected to continue to enjoy positive sentiments and Nifty may touch 9,500 (points) in the coming weeks."

Apart from the outcome of the GST Council's meet, investors will be looking forward to the upcoming quarterly results. Major entities like State Bank of India, Punjab National Bank, Bank of Baroda, Bajaj Auto, Tata Power, Tata Steel and Hindustan Unilever are expected to announce their quarterly results.

"The earnings growth vis-a-vis the expectations would continue to influence the markets in the coming week. So far, they have been mixed," Devendra Nevgi, Chief Executive of Zyfin Advisors, told IANS.

"News- and event-driven action would continue in sectors such as consumer (good monsoon) and banks (better NPA recognition)."

According to Nevgi, the stock market movement will also depend on the investment inflows from foreign and domestic participants.

"The FPI (foreign portfolio investors) inflows have started turning positive since the past few days while the DII (domestic institutional investors) have turned negative," Nevgi said.

"The markets will also be supported by the larger mutual funds inflows, which would be the dominating feature of the markets in coming times, as non-equity asset classes remain underperforming."

In terms of investments, figures from the National Securities Depository (NSDL) have revealed that FPIs invested Rs 1,970.2 crore, or $305.15 million, in the equities segment during the May 8-12 week.

The provisional figures from stock exchanges showed that foreign institutional investors (FIIs) bought stocks worth Rs 2,832.27 crore, while DIIs divested scrip worth Rs 1,297.49 crore.

Currency-wise, the Indian rupee is expected to remain firm. It strengthened by eight paise to 64.30 against a US dollar on May 12.

"High real rates and conservative monetary and fiscal policy would continue to keep foreign investors interested in rupee assets," Anindya Banerjee, Associate Vice President for currency derivaties at Kotak Securities, told IANS.

"We continue to expect more appreciation over the medium term. We can see rupee heading towards 62.00-62.50 over the medium term."

On technical-levels, NSE Nifty is expected to chart a northward course during the next week.

"While the Nifty has taken a breather, the underlying trend continues to remain up till 9,269 (points level) is protected," Deepak Jasani, Head - Retail Research, HDFC Securities, told IANS.

"The uptrend could resume once the immediate resistance of 9,450 (points) is taken out."

Last week, the key equities markets -- NSE Nifty and BSE Sensex -- turned bullish on forecast of healthy monsoon rains.

In addition, the substantial inflow of foreign funds and global cues kept investors' sentiments buoyed.

However, gains were pared due to a sell-off led by banking stocks on last Friday.

Consequently, the S&P BSE Sensex augmented by 329.35 points or 1.10 per cent to 30,188.15 points, and the NSE Nifty moved up by 115.6 points or 1.24 per cent to 9,400.90 points.

(Rohit Vaid can be contacted at rohit.v@ians.in)