Key events that could influence the Indian financial markets

The year 2022 began on a happy note as the equity markets ended the first week with gains. Even though the ongoing concerns about the Omicron threat persist, global stocks managed to end in positive territory. Last week, the markets took charge but witnessed some volatility as they interpreted the Federal Reserve’s hawkish stance with the policies.

The Indian benchmark indices, BSE Sensex and NSE Nifty50 moved gained about 1.5% taking the former to 59,745 and the latter to 17,800 levels. The broad-based market indices MidCap and SmallCap gained around 1.5% to 2% each.

Going ahead, certain events could influence the market movements. Here they are:

Quarterly Results

The third quarter of FY 2021-22 has ended in December and companies will soon be coming up with their Q3 results. Although the financial results mainly have an impact on the individual stocks, their inclusion in the indices can make the markets volatile.

In the coming week, about 40 Indian companies are lined up to come up with Q3 numbers. The list includes names like TCS, Infosys, HCL Tech, and HDFC.

Key Factors to Notice in Q3 Results of IT Companies

Off late, the IT pack has shown an outstanding performance. This was backed up by the growth expectations of investors from IT companies due to the higher number of dealings and the potential revenue growth.

This had fueled upside momentum in the IT stocks. Therefore, the key factors such as margin projective, attribution figures, and revenue growth must be kept an eye on as the numbers are announced.

Positive Impact of Bank’s Loan Growth

In Quarter II of FY 2021-22, the loans given by the banks have seen a growth of more than 10%. This has increased the earnings of the banking companies as more interest revenue was collected. The same momentum is expected in the third quarter as well.

Out of thirteen banks, 10 banks have reported more than a 10% increase in loans. Therefore, this could be a key factor to watch for in the banking company quarter results as it will have an impact on the banking index as well.

Management’s comments on Omicron Effect

As the Covid-19 cases have been on the rise again, it will be impactful how the company’s management approach is lined up towards dealing with the potential lockdowns. Their comment about the raising Omicron concerns must be looked out for as it could have a direct impact on the stock market.

Inflation & GDP Data

On January 12, 2022, the data about inflation and industrial production numbers for November 2021 will be announced. It will be followed by the announcement of wholesale inflation data on January 14, 2022. The reaction to these numbers will also be backed by the GDP numbers that were announced last Friday.

These economic data have an impact as investors make decisions based on their fundamental analysis. In FY 2020-21, GDP contracted by 7%. However, the Central Government is expecting the GDP of FY 2021-22 to grow by 9.2%. Three more months are left for the annual data to flow.

How can the markets be perceived?

The markets could consolidate as there is mixed data. As per the recent trend, the market is facing resistance on the upper levels as many are booking their profits closer to all-time-high. A more cautious approach is being taken by the investors as the number of Covid cases is increasing day by day.

Many investors and traders are hedging their positions as the market could take a major direction as and when the pictures get clear. However, as per the technical charts, indices are trading closer to the previous week’s high. While Nifty could soon be reclaiming its 18000 level, it trades well between a thousand point range in the coming days. Sensex, on the other hand, could face resistance around 60,500 levels after reclaiming its position above 60,000.

FAQs

What is Industrial Production data about?

Industrial production refers to the activities of companies involved in various industries such as mining, manufacturing, gas, and electricity. The industrial production data acts as an indicator to measure the volume of production output of an industry. It is based on a reference period that measures the change in the production of that industry.

How is GDP calculated in India?

The gross domestic product of India is computed using two different methods. The first method is based on the country’s economic activity, while the second method is based on its expenditure. Calculations are then made based on the current market price and the inflation-adjusted data. The factor cost of goods and services is the most widely followed figure.

How do banks earn revenue from loans?

When the banks offer loans to the borrowers, they charge interest. This rate of interest is higher than the interest offered by banks on the deposits. The surplus interest charged by the banks is their revenue. As the number of loans rises, their revenue number increases.

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.