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Analysis

Q2 results, macro data to steer equity market; value buying expected

Similarly, the S&P Bombay Stock Exchange (BSE) Sensex lost 966.32 points, or 2.81 per cent during the week, to close at 33,349.31 points.

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Private Equity Investors

Mumbai, Oct 28 : Quarterly results, along with manufacturing PMI and fiscal deficit data, are likely to drive the Indian equity market in the coming week.

Market participants and analysts expect value buying in the indices as the market has been largely bearish in the last couple of weeks.

In terms of quarterly results, companies like Bank of Baroda, Tata Power, Tata Motors, Union Bank of India, Lupin, DLF, HDFC, Axis Bank, Punjab National Bank, SAIL and Vedanta are likely to announce their second quarter earnings in the coming week.

Further, the Nikkei Manufacturing Purchasing Managers’ Index (PMI) for October will be released on Thursday, November 1, and the fiscal deficit data for September is due on Wednesday, October 31. This macroeconomic data would be key for the market sentiments.

“Manufacturing PMI and infrastructure output numbers will be seen crucially while leads will also be taken from ICICI Bank’s result (released on Friday). Mostly the trend will be in tandem with the global markets and indices such as S&P 500,” said Mustafa Nadeem, CEO, Epic Research.

On the technical front, the Nifty50 is seen receiving support at 9,951 points and 10,139 would be the immediate resistance level, analysts said.

In the week gone by, the National Stock Exchange (NSE) Nifty50 lost 273.55 points, or 2.65 per cent, on a weekly basis to settle at 10,030 points on Friday.

Similarly, the S&P Bombay Stock Exchange (BSE) Sensex lost 966.32 points, or 2.81 per cent during the week, to close at 33,349.31 points.

On Friday, both the Sensex and the Nifty dropped to seven-month lows.

“During the ongoing Q2 corporate earnings, companies declared lower-than-expected numbers which led to disappointment on the street. FII selling, lower-than-expected earnings and global markets sell-off combined, led to major selling in the markets,” said Rahul Sharma, Senior Research Analyst at Equity99.

In the coming week, the direction of flow of foreign funds will assume significance as there have been massive outflows in October, as investors pulled out from emerging markets to redeploy their capital in safe-havens such as US securities.

According to data provided by the National Securities Depository (NSDL), the monthly outflow of foreign funds at Rs 24,186 crore from the equity segment was at its highest so far in October.

The NSDL website has data from 2002, as Indian markets received minuscule funds from foreign investors prior to that, said Deepak Jasani, Head of HDFC Securities.

During the week just-ended, provisional figures from the stock exchanges showed that foreign institutional investors sold shares worth Rs 5,751.17 crore, whereas domestic institutional investors bought Rs 4,508.62 crore worth of stocks.

Figures from the NSDL showed that foreign portfolio investors divested Rs 4,563.31 crore, or $622.5 million, in the equities segment during the week ended October 26.

Besides, the rupee’s movement against the US dollar and global crude oil prices will also be closely followed by investors.

The Indian rupee on Friday closed at Rs 73.46 to a US dollar, weakening by 14 paise from its previous week’s close of 73.32.

(Ravi Dutta Mishra and Rituraj Baruah can be contacted at [email protected] and [email protected] )

Analysis

Eliminated JeM leadership within 100 hrs of Pulwama attack: Army

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Dantewada Attack

Srinagar, Feb 19 (IANS) The Indian Army on Tuesday said within 100 hours of the February 14 Pulwama attack on a CRPF convoy that left 40 troopers dead, it eliminated the Jaish-e-Mohammad (JeM) leadership in the valley that planned and executed the deadly carnage.

This was stated by Lt Gen K.S. Dhillon of the 15 Corps Commander, at a joint press briefing here in Jammu and Kashmir, along with officials state police and the Central Reserve Police Force (CRPF).

He also made it clear that the Pulwama attack was carried out by the JeM, which is based in Pakistan, with active support of the Inter-Services Intelligence (ISI) and the Pakistan Army.

“Within 100 hours of the Pulwama terror attack, we hit the JeM in the Kashmir Valley which was being handled by the Pakistan-based JeM,” Dhillon said.

He also added that the details of the two terrorists and one local conduit who were killed in the operation was shared on Monday.

“The local commanders, most of them Pakistanis, who were in-charge of controlling, coordinating, fabricating and executing the attack on Thursday, were the top leadership of the JeM in the valley,” Dhillon said.

Since the JeM leadership was already being tracked, the Indian operation was launched on Sunday night on specific information of the module.

Giving a stern warning to sympathisers of the terror movement in the state, he said: “Anyone who picks up a gun in Kashmir will be eliminated, unless the person surrenders.”

“I would also like to tell one thing to the parents of the Kasmhiri youths, especially the mothers, as I understand that they have a key role. Through you, I request the sons to surrender and join the main stream,” the officer said.

In the biggest crackdown after the February 14 attack by a suicide bomber that left 40 CRPF troopers dead in Pulwama district, the security forces ringed a militant hideout in Pinglena village, just 10 km from the Thursday’s terror attack site, triggering a gun battle Sunday overnight that continued intermittently till Monday evening.

They killed three militants of the Pakistan-backed JeM, two of them Pakistani nationals identified as Kamran and Abdul Rashid alias Ghazi Umar. Besides, a Major, three soldiers and a civilian were also killed in the initial burst of gunfire by the militants.

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Analysis

Dealings of European missile manufacture under scanner

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Rafale Fighter Jet

New Delhi, Feb 17 (IANS) A leading European arms manufacturer MBDA, which supplies missiles for the Rafale jets, has come under the scanner of probe agencies here for its suspected links with lobbyist Deepak Talwar, who was extradited from Dubai last month.

The country head of MBDA, Loic Piedevache, has been summoned by the Enforcement Directorate to appear before it on Monday in connection with the probe relating to the company’s links to Talwar, who is believed to have steered several deals with Airbus, which holds a stake in MBDA, during the UPA regime, according to sources.

Infrastructure major Larsen & Toubro had entered into a joint venture with MBDA to supply missiles and missile systems to the Indian armed forces.

L&T holds 51 per cent stake in the joint venture, L&T MBDA Missile Systems, and had identified defence as one of the key drivers for achieving growth in the sector.

The sources claimed that apart from questions on the company’s engagement with the Indian forces, Piedevache would also be questioned on the alleged payments to Talwar’s NGO. Advantage India, to the tune of Rs 88 crore between 2012 and 2015, from MBDA and Airbus.

Later, the entire money was said to have been withdrawn in cash by using “fake purchases”, the sources said.

Analysts said this was probably a rare occasion when the India head of a leading international firm was being summoned by a probe agency.

Piedevache has been heading the company’s operations in India for a decade. The Mirage upgrade programme and Rafale were signed during Piedevache’s tenure in India and he could be privy to information, the sources said.

“If required, the probe agency may also summon group export director Jean-Luc Lamothe. First of all, Piedevache would be asked to explain the company’s payments to Talwar’s NGO,” the sources said.

Piedevache could not be reached for his comments. An MBDA spokesperson said the company would support the authorities in their probe. It maintained that it had supported social development initiatives in India as part of corporate social responsibility, which included some payments to the NGO.

The company is involved in the Rs 30,000 crore offset programme associated with the 36 war planes.

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Analysis

Rupee weakened against $ in choppy weekly trade

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India Rupee

Mumbai, Feb 17 (IANS) In a choppy week’s trade, the Indian currency weakened against the US dollar to close above the 71 a dollar mark on Friday, owing to a sharp rise in crude oil prices, turmoil in the equity markets and uncertainty around the US-China trade relations.

In what could translate into further trouble for the domestic currency, analysts see an upward move of 6 to 7 per cent in the Brent crude prices in the coming week.

The rupee lost heavily towards the end of the week – over 70 paise in the last three trading session – as traders reacted to the sanction on Venezuela and production cut by OPEC and Saudi Arabia.

Sajal Gupta, Head Fx & Rates Edelweiss, said “technically … crude now looks set for another 6-7 per cent rise” which would mean that the rupee was likely to depreciate further in the coming sessions. “And if Rs 71.80 per dollar is broken, we can head towards Rs 72.50 mark.”

Among other factors impacting the currency, Gupta said, with crude and dollar index giving breakout, rupee would remain under pressure. Trade deficit data released on Friday post market was also not very encouraging with monthly deficit touching almost 15 billion dollars.

“Political tensions would also remain heightened with key leaders vowing strong retaliation in wake of the biggest terror attack in the Kashmir valley.”

Explaining the factors which has caused volatility, Anindya Banerjee of Kotak said the currency markets largely depend on the capital flows … and right now the fear of a possible retaliation by the government in response to the Pulwama attack is having an affect.

“The context of the whole event is also important because (Lok Sabha) elections are around the corner,” Banerjee said.

Also, the currency losing against the dollar and rising crude oil prices was a double whammy for the bond markets, he added.

On the global front, discussing the factors affecting the currency, Banerjee said, the Chinese economy was very fragile right now and moreover investors were looking for developments in the US-China trade talks.

However, Gurang Somaiya, currency analyst, Motilal Oswal, felt that the rupee was protected from any major weakness as “Foreign Institutional Investment (FII’s) came around good”, especially in February.

According to data from the bourses, FII has seen inflows worth Rs 1,096 crore in February.

India on Friday revoked the Most Favoured Nation Status (MNS) of Pakistan and has warned that more stern actions will follow the attack in Pulwama. Additionally, equity markets have declined for 6 straight sessions showing weak investor sentiments.

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