Corporate results, COVID numbers will shape market performance this week

Amid the second wave of COVID that has mercilessly pummelled the nation, the stock markets have been offering some reprieve. Last week, after a certain degree of volatility, the BSE Sensex and the Nifty 50 rose 0.5% and 0.67%, respectively, with metal stocks (particularly steel) doing well and small- and mid-cap stocks retaining some momentum.

Various factors helped the markets last week. For one thing, the strong corporate earnings that were reported held the promise of better days to come. For another, Reserve Bank of India Governor Shaktikanta Das announced a slew of measures to help the tottering economy get back on its feet. These included liquidity on-tap for banks to on-lend to micro, small and medium enterprises (MSMEs) and individuals, a second round of debt restructuring and relaxation of KYC norms, among others.

Global cues were strong, too, with economic data coming from the US and China boosting markets worldwide.

What to Expect This Week

India Inc’s report card: Corporate majors including Larsen & Toubro, Dr Reddy’s Laboratories, Jindal Steel and Asian Paints are set to announce the results of their performance in the fourth quarter of 2020-21 (Q4 FY21).  How well or poorly they performed amid the pandemic will have some bearing on the stock markets.

Since COVID had abated to an extent in the January-March 2021 period, and factories had worked across shifts with orders picking up, the fourth-quarter results may be encouraging, said market experts.

COVID scenario: With almost all states announcing complete lockdowns to contain the pandemic, the caseload and mortalities may come down, though the exact degree is difficult to judge. If the numbers dip — from the alarming 4 lakh-plus new cases and 4,000-plus deaths a day currently — the Sensex and Nifty are likely to take a cue and surge.

Also, with the vaccine programme for the 18-44 age group set to take off amid increased availability, this, too, could positively impact the markets. On the other hand, a continued shortage that stalls the programme could impact the markets adversely.

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Economic data: Key macroeconomic data such as those related to inflation (for April 2021), and the Index of Industrial Production numbers for March 2021, are set to be announced this week. These, again, will have some influence on the markets. It is estimated that while the inflation numbers will remain elevated, IIP data will be encouraging, thanks to robust growth seen in March.

The India Meteorological Department has forecast a normal monsoon this year. The southwest monsoon, which begins in Kerala in the first week of June, has an enormous impact on the nation’s all-important farm sector. Hence a ‘normal’ forecast spells good news, and is again likely to keep the stock markets buoyant this week.

According to market experts, the Nifty may rise to 15,000-15,050 levels. If the COVID and economic data turn out to be positive, the Sensex may cross the 50,000 level, it is expected. The markets will remain closed for trading on May 13 on account of Id-Ul-Fitr.