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US-China trade truce, macro data, Q2 numbers among key factors steering D-Street next week

Here are five key factors that are likely to chart market direction in the week ahead.

Oct 13, 2019, 09.41 AM IST
Domestic equities ended the week gone by with over 1 per cent gains amid strong volatility, which led both Sensex and Nifty to finish above their crucially important 38,100 and 11,300 levels, respectively.

IT bellwether TCS and Infosys posted September quarter earnings more or less in-line with expectations.

“While the Street has built in the slowdown effect in earnings, if actual earnings turn out to be worse, then the market could slip and vice versa. A partial trade deal between the US and China may also lift sentiment, though it could also have negative implications in terms of higher crude and commodity prices,” said Sanjeev Zarbade, VP for PCG Research at Kotak Securities.

Going by the buzz on Dalal Street, here are five key factors that are likely to chart market direction in the week ahead:

US-China partial trade deal: The US and China took an initial step on Friday to cement a trade agreement that had been derailed for months. President Trump said the US would call off planned tariff increases on Chinese goods next week, while Beijing pledged to buy $40 billion to $50 billion worth of American agricultural products. This isn’t the deal stock markets were hoping for. Yet, US stocks rallied on Friday. The Dow Jones Industrial Average rose 242.87 points, or 0.9%, to 26,816, while the S&P 500 index advanced 0.6% to 2970.27, and the Nasdaq Composite gained 0.9% to 8,057. The Dow and the S&P500 snapped three-week losing streaks, while the Nasdaq has now gained for two straight weeks.

Macro data: Traders will keep an eye on wholesale price (WPI) and consumer price (CPI) inflation prints for September, which are slated to be released next week. Further, they will also be awaiting for India’s balance of trade number for September, which is scheduled to be released on October 15. India's trade deficit narrowed to $13.45 billion in August from $17.92 billion in the same month last year and below market expectations of $13.60 billion.

Q2 earnings: Some important earnings are lined up for the week ahead. They include of numbers from HUL, ACC, Ambuja Cement, Wipro, L&T Finance and TVS Motor besides Delta Corp, GTPL Hathway, Karnataka Bank, MCX, SBI Life Insurance Company, Aditya Birla Money, Chennai Petroleum Corporation, Cyient, Larsen & Toubro Infotech, PVR, South Indian Bank, ICICI Lombard, L&T Finance Holdings and Sasken Technologies.

RBI MPC meet minutes: The Reserve Bank of India will release the minutes last monetary policy committee meeting held during October 1-4 this week on October 18. The MPC decided to cut policy rates by 25 basis points, bringing it to the lowest level in a decade at 5.15 per cent.

Budgetary exercise begins: The Finance Ministry will kick off budgetary exercise for 2020-21 from October 14 and will continue it till the first week of November, when financial advisers of different ministries will prepare revised estimates for this financial year and to make preparations for the next. Further, the Finance Minister will hold a review meeting with CEOs of public sector banks (PSBs) on October 14 to discuss various issues, including progress on credit offtake.

Global cues: On the global front, market participants will watch key economic data from the US, starting from Redbook on October 15 followed by Retail Sales, Beige Book, Treasury International Capital on October 16, Jobless Claims, Fed Balance Sheet, Money Supply on October 17, and finally Baker-Hughes Rig Count on October 18. A number of data from China will also be on the market radar, including loan growth and trade balance prints due on October 14 and industrial production data to be released on October 18.

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