Indian equity benchmarks are poised to start the week on a positive note, tracking firm cues from Asian peers and record finish at Wall Street on Friday. The positive trends on SGX Nifty also indicated a gap-up opening for the domestic bourses, with SGX Nifty futures trading 158 points, or 0.92%, higher at 17,262 on the Singapore Stock Exchange at 8:00 AM.

The markets will keep an eye on the Economic Survey to be presented by the ministry of finance at around 12 pm today, a day ahead of the Budget. The survey data will show how the economy performed in the previous year, with the government suggesting measures to boost economic growth in the current year.

The domestic equity market is expected to witness volatility this week ahead of the highly-anticipated Union Budget due tomorrow. Adding to it, corporate earnings, geopolitical tensions, crude prices will also set the tone for the market.

On Friday, the benchmark indices witnessed highly volatile trade, with the BSE Sensex falling as much as 884 points from day’s high to close a tad lower. The Sensex closed 77 points, or 1.13%, lower at 57,200, and the NSE Nifty fell 8 points, or 0.05%, to end lower at 17,101. Outperforming the benchmark indices, the broader markets settled higher. The S&P BSE Midcap index and the S&P BSE Smallcap index gained more than 1% each. On the sectoral front, healthcare and IT indices were among top performers, while banks and auto witnessed maximum selling. The top five losers on the BSE Sensex pack were Maruti Suzuki India, Tech Mahindra, Power Grid Corporation of India, ICICI Bank, and Axis Bank.

Stocks to focus

Tata Motors: The auto major is scheduled to release its December quarter earnings reports today. The company is expected to report growth on a sequential basis, but year-on-year (YoY) performance is likely to remain fragile.

Larsen & Toubro (L&T): The engineering and construction major posted a 17% YoY decline in consolidated net profit to Rs 2,055 crore for Q3FY22, weighed down by higher raw material costs. The revenue surged 11% YoY to Rs 39,563 crore.

Kotak Mahindra Bank: The private sector lender on Friday posted a 31% year-on-year (YoY) rise in consolidated net profit at ₹3,403 crore in Q3FY22. Its net profit stood at ₹2,602 crore in the year-ago quarter.

NTPC: The state-owned power company saw its consolidated net profit rising by 19.3% to ₹4,626.11 crore from ₹3,876.36 crore in Q3FY21. Total income also jumped 19% YoY to ₹33,783.62 crore. The company has also declared an interim dividend of ₹4 per share.

Dr Reddy's Laboratories: The pharma company has reported a multi-fold rise in consolidated net profit at ₹706.5 crore for the third quarter ended December 31, 2021.

Adani Total Gas: Billionaire Gautam Adani-led company has secured three gas supply agreements each in Assam and Chhattisgarh, four in Maharashtra, two in Madhya Pradesh, and one each in Jharkhand and Odisha.

Marico: The FMCG company’s net profit rose 1.6% YoY to ₹317 crore in Q3FY22. Revenue jumped 13.43% YoY to ₹2,407 crore as against ₹2,122 crore in the year ago period.

Central Bank of India: The bank’s net profit jumped 69.1% YoY to ₹279 crore in Q3FY22. The lender’s net interest income (NII) surged 23.25% YoY to ₹2,746 crore.

Textile stocks: The central government has extended the timeline for companies to submit their online applications under the Production Linked Incentive (PLI) scheme for textiles till February 14.

Here are the key things investors should know before the market opens today:

Wall Street ends volatile week with biggest rally of the year

Wall Street ended a highly volatile week of trading with the biggest gain of the year on Friday as investors chipped in to buy beaten-down stocks. The U.S. stocks witnessed a wild swing last week after the Federal Reserve indicated it is likely to raise interest rates in March, while strong GDP data further fuelled fear about the sooner-than-expected hike in rates.

On Friday, the benchmark S&P 500 closed 2.4% higher, driven by a surge in buying in the last hour of trading. The blue-chip Dow Jones index added 1.7%, and the tech-heavy Nasdaq Composite rallied 3.1%.

The U.S. benchmark indices notched the biggest single-day gain of the year on Friday after economic data released on Friday showed a fall in consumer spending as well as consumer sentiment, which eased inflation fears. Adding to it, core personal consumption expenditure prices – the Federal Reserve’s preferred inflation yardstick – stood at 4.9% on a year-on-year basis.

Asian shares follow Wall Street higher

Shares in the Asia-Pacific region opened mostly higher on Monday, tracking positive cues from Wall Street which finished higher on Friday. The caution prevailed in the market as investors expect the Bank of England to raise interest rates again this week, while the continued rise in oil prices added to concerns over inflation.

The Japanese stock market traded higher in early trade, with the benchmark Nikkei 225 rising 0.8%. The Straits Times Index in Singapore rose 0.55%, and Indonesia’s Jakarta Composite climbed 0.15%. The Hang Seng index in Hong Kong also gained 0.6%.

In mainland China, the Shenzhen component and the Shanghai composite dropped 0.5% and 1%, respectively, after data released on Sunday showed that China's factory activity slowed in January. Australia’s ASX 200 index also dropped 0.25%.

Technical outlook

Nifty held key support of 16,800 despite global volatility and settled at 17,102, down 2.9% for the week, according to analysts at ICICI Direct research report.

“This week, volatility is expected to be elevated around Union Budget 2022. Nifty holding strong support of 16,800 post Union Budget may lead to technical pull back towards 17,600, from oversold trajectory, the report said.

“Sectorally, BFSI, PSU, Capital goods and Infra, Auto to remain in focus while IT sector is oversold and poised for technical pull back. In large caps we like Reliance Industries ,SBI, Axis Bank, Tata Motors, Larsen & Toubro, Container Corporation, Titan while in Midcaps we prefer Bank of Baroda, KNR Constructions, Tata Power, Bharat Dynamics, National Aluminium, Thermax, Greaves Cotton, Gokaldas Export,” it added.

Brent crude prices hover near 7-year high

The oil prices continued to rise as worries about a potential conflict between Ukraine and Russia pushed fuel prices higher. Since its December low, the U.S. West Texas Intermediate (WTI) has gained nearly 42%, while Brent surged around 39%.

During the early Asian trading hours, the global benchmark Brent crude futures surged 0.72% to $89.64 per barrel, hovering around seven-year highs hit in the previous session. The U.S. WTI crude futures rose 1.38% at $88.02 a barrel.

On Friday, Brent crude oil price climbed 0.8% to $90.03 a barrel, while the U.S. WTI added 0.2% to $86.82 per barrel.

The market is focused on a meeting of the Organisation of the Petroleum Exporting Countries (OPEC) and allies led by Russia on February 2.

Corporate earnings

More than 100 companies are slated to release their December quarter earnings reports today. The list include some big players such as oil companies BPCL, HPCL, and Indian Oil, auto major Tata Motors, pharma giant Sun Pharmaceutical Industries, and real estate major DLF.

Among others, Aarti Drugs, Ajanta Pharma, Krsnaa Diagnostics, Navin Fluorine International, Satin Creditcare Network, Shipping Corporation of India, LT Foods, Dwarikesh Sugar Industries, Edelweiss Financial Services, Exide Industries, GIC Housing Finance, Housing Development & Infrastructure, Hester Biosciences, Infibeam Avenues, Jindal Saw, KEC International, KPIT Technologies, Suven Life Sciences, UCO Bank, UPL, Venus Remedies, and Voltamp Transformers, will also release their earnings report on January 31.

FIIs remain net sellers, DIIs turn net buyers

Foreign institutional investors (FIIs) continued to remain net sellers in the Indian equity market on January 28, while domestic institutional investors (DIIs) turned net buyers. As per the data available on the NSE, FIIs sold shares worth ₹5,045.3 crore, while DIIs net bought shares worth ₹3,358.7 crore.

Foreign portfolio investors (FPIs) flushed out ₹28,243 crore from Indian equities in January, turning net sellers for the fourth consecutive month. As per the depositories data, FPIs pulled out ₹28,243 crore from Indian equities between January 3-28, while it invested ₹2,210 crore into debt segment and ₹1,696 crore into hybrid instruments during the same period.

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