Sensex and Nifty: A Muted Start Expected for Indian Markets

The Indian stock markets, represented by Sensex and Nifty, are anticipated to start Monday’s trading session on a muted note. As indicated by GIFT Nifty futures, the index was down 11.15 points or 0.04 per cent at 24,938 ahead of the opening bell. Market participants are closely watching global market cues and corporate earnings, which are expected to steer market direction today.

Mixed Performance in Global Markets

The global stock markets are exhibiting a mixed performance, with Asian markets trading in various directions. Key Asian indices like Japan's Nikkei, South Korea’s KOSPI, and China’s Shanghai Composite were in the green, supported by China's central bank, the People’s Bank of China, delivering a larger-than-expected rate cut. This policy move injected optimism into the Chinese markets, which had been under pressure in recent months due to economic concerns.

Conversely, other Asian indices, including Hong Kong’s Hang Seng and Singapore’s Straits Times, were trading lower. The MSCI Asia ex-Japan index managed to edge higher by 0.07 per cent. On the other side of the globe, US stock indices closed higher in the previous session, with the Nasdaq leading the gains at 0.63 per cent, supported by technology stocks. The US markets continue to trade near their record highs, offering positive cues for global investors.

Indian Markets Recover on Friday: Key Takeaways

In the previous trading session on Friday, Indian equities staged a recovery following three consecutive days of losses. The Nifty ended 0.42 per cent higher, up 104.2 points at 24,854.05, while the Sensex gained 218.14 points or 0.27 per cent to close at 81,224.75. The Bank Nifty outperformed the broader markets, rising over 1 per cent, driven by gains in banking heavyweights such as Axis Bank and ICICI Bank.

Prashanth Tapse, Senior VP (Research) at Mehta Equities, noted that Friday’s session was marked by volatility, with bears dominating the initial trade, but bulls managed to take control by the end of the day. He highlighted that the drop in WTI crude prices below $69.50 per barrel and positive cues from Wall Street contributed to the optimism.

However, concerns remain around the weak Q2 earnings and continued foreign institutional investor (FII) outflows, which have amounted to over Rs 80,200 crore in October. This could limit Nifty’s upside potential in the short term.

Key Stocks to Watch on October 21, 2024

A slew of corporate earnings reports will be in focus on Monday, with more than 40 companies scheduled to announce their financial results. Among the most notable are:

HDFC Bank: The private sector banking leader reported a solid 5.3 per cent year-on-year increase in its net profit, amounting to Rs 16,821 crore for the July-September period. The results were better than analysts' expectations, contributing to the bank's positive outlook.

Tata Consumer Products: The company’s earnings were in line with expectations, showing a revenue growth of 13 per cent and a margin expansion of 40 basis points (bps) to 14.8 per cent. Analysts were expecting a margin of 14.5 per cent, so the company slightly exceeded forecasts. The performance highlights the Tata Group’s solid foothold in the fast-moving consumer goods (FMCG) sector.

Tech Mahindra: The IT major surprised analysts with a strong quarterly performance, reporting a 46.7 per cent jump in net profit on a quarter-on-quarter basis, amounting to Rs 1,250 crore. The company’s sequential revenue growth of 2.4 per cent also beat expectations, underscoring the resilience of India’s IT sector despite challenges.

ICICI Lombard: The general insurance giant posted a robust 20 per cent increase in net profit to Rs 694 crore, reflecting growth in its business segments.

MCX: The commodity derivatives exchange posted impressive growth, with revenue jumping 73 per cent to Rs 286 crore for the September quarter. The exchange continues to benefit from increased market activity and higher trading volumes.

Global Factors Shaping Indian Markets

While corporate earnings will dominate the headlines, global factors will continue to influence Indian market trends. The US Federal Reserve’s interest rate policies, ongoing geopolitical tensions, and inflation concerns in major global economies remain critical variables. The performance of global indices, particularly in Asia and the US, will provide direction for Indian markets throughout the day.

Moreover, investors will keep a close watch on the FII activity, as sustained outflows can put pressure on the market’s ability to sustain gains, particularly in the face of subdued earnings from certain sectors like IT.

Looking Ahead: Market Sentiment and Challenges

Indian equities are poised for a range-bound session today, with upside momentum potentially capped by global headwinds and weak domestic earnings in certain sectors. However, select pockets of strength, such as banking, consumer goods, and energy stocks, may help markets stay afloat.

While optimism stemming from global markets and lower crude oil prices could support a positive bias, volatility is expected to persist. Investors should adopt a cautious approach, particularly as Q2 earnings from India Inc. continue to roll in.

The market will also watch out for policy updates, both from the Indian government and global central banks, as these could shape investor sentiment in the coming days.

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