Indian equity benchmarks are poised to open lower on Tuesday, following weak cues from Asian stocks and a volatile session overnight on Wall Street. The concerns about the U.S. Federal Reserve policy tightening, rising political tension in the Middle East, quarterly earnings numbers, foreign fund flows, and monthly derivatives expiry, are also likely to impact trade. The bearish trends on SGX Nifty also indicated a negative opening for the domestic bourses, with SGX Nifty futures trading 117 points, or 0.7%, lower at 16,940 on the Singapore Stock Exchange at 8:10 AM.
The equity market is expected to see volatility in this holiday-shortened week ahead of the highly-anticipated Union Budget 2022 lined up next week. The market will remain closed on Wednesday on the eve of Republic Day.
On Monday, the Indian benchmark indices continued the sell-off for the fifth straight session as weak global cues and economic uncertainties caused by the fresh wave of the Covid-19 pandemic dented market sentiment. The BSE Sensex closed 1,545 points, or 2.62%, lower at 57,491, and the Nifty ended at 17,112, down by 504 points, or 2.86%. All the sectoral indices settled in negative terrain, with realty, metal, auto, IT, power, pharma indices falling between 2.6%. All 30 stocks of the BSE Sensex closed in red, while biggest casualties were Tata Steel, Bajaj Finance, Wipro, Tech Mahindra, Titan Company, Reliance Industries, HCL Tech, Bajaj Finserv, Asian Paints and Kotak Mahindra Bank.
Stocks to watch
Axis Bank: The private lender on Monday reported a threefold jump in its third-quarter net profit on the back of strong growth in its net interest income and improving asset quality. Net profit of the bank surged 224% year-on-year to ₹3,614 crore in the quarter ended December 2021 compared with ₹1,117 crore in the year-ago period.
Maruti Suzuki: The auto major is slated to release its third quarter earnings report today. The country’s largest car maker is expected to post a fall in net profits for the October-December quarter of the current fiscal, while revenue is likely to be flat to positive due to lower volumes, as per market analysts.
Hero MotoCorp: The two-wheeler maker said its board has given the nod to invest up to ₹700 crore in Hero FinCorp, subject to certain conditions.
Vodafone Idea: The debt-laden telecom company is reportedly expected to raise mobile services rates later this year. The final call will be taken based on the market reaction to the tariff hike made in November.
Shriram Transport Finance: The non-bank financing company posted a 6.5% drop in standalone profit at ₹680.62 crore in the quarter ended December 2021, compared to ₹727.72 crore in the same period of the previous year.
SBI Cards and Payment Services: The credit card service provider reported 84% growth in net profit at ₹386 crore for the December quarter of the current fiscal, driven by healthy card spending, drop in bad loans, and rise in other income.
Here are the key things investors should know before the market opens today:
U.S. stocks rebound from rout to close higher
In the overnight trade, all three major U.S. indices staged a smart recovery to close higher after falling up to 5% intraday due to escalating geopolitical tensions and the Federal Reserve’s campaign against inflation. The Fed will begin its two-day meeting tonight and investors will keep a close eye on the central bank's measures to counter rising inflation and timeline to raise rates.
In the highly volatile session, the S&P 500 index dropped as much as 4% in early deals amid concerns that rising inflation will lead the Fed to hike rates and roll back economic stimulus that has been boosting growth stocks. However, the indices rebounded strongly as investors stepped in to buy beaten-up growth-driven tech stocks.
Driven by strong rebound in the late hour of trade, the Dow Jones index closed 0.3% higher, the S&P 500 also added 0.3%, and the NASDAQ Composite settled 0.6% higher.
Asian markets fall on Ukraine, U.S. rate hike fears
Shares in the Asia-Pacific region fell sharply in early trade on Tuesday, tracking wild volatility on Wall Street overnight amid concerns about rising inflation and policy tightening by the US Federal Reserve. The sell-off has been exacerbated by looming fear that Russia could invade Ukraine.
The Japanese stock market plunged in early trade, with the benchmark Nikkei 225 falling nearly 2% and the Topix by 1.8%, following negative cues from Wall Street. The concerns about the fast spread of the coronavirus omicron variant in the country also weighed on investor sentiments.
China mainland shares also fell in early deals, with the Shenzhen component and the Shanghai composite dropping 1.1% and 0.7%, respectively.
South Korea’s KOSPI was the worst performer in the region by crashing 2.3% even after its economy expanded at the fastest pace in 11 years in 2021. The gross domestic product (GDP) of the country rose to 4% in 2021, driven by strong exports demand.
The Hang Seng index in Hong Kong plummeted 1.6%, while Australia’s ASX 200 index also shed 2.2% after inflation surged more than expected in the last few months of 2021.
In a similar trend, Indonesia’s Jakarta Composite, Thailand’s SET Composite, and the Straits Times Index in Singapore traded declined up to 1%.
Oil prices fall 2% overnight amid rising geopolitical tensions
Global benchmark Brent crude dropped nearly 2% in overnight trade as fear about sooner than expected interest-rate hikes by the US Federal Reserve and rising geopolitical tensions rattled investors’ sentiments. NATO announced on Monday that it was putting forces on standby to avoid a potential Russian invasion of Ukraine, indicating a rise in political tensions in middle-east.
In the overnight trade, U.S. WTI crude slipped 2.2% to $83.31 per barrel and Brent tumbled 1.8% to $86.27 a barrel.
During the early Asian trading hours, the U.S. West Texas Intermediate (WTI) crude futures were up 0.6% at $83.81 a barrel, while the Brent oil futures fell 0.21% to $86.21 per barrel.
Corporate earnings
The big companies that will announce their December quarter results today include Maruti Suzuki India, Cipla Indiabulls Real Estate, ICRA, United Spirits, Federal Bank, Raymond, and others.
Among others, Allsec Technologies, APL Apollo Tubes, Astec Lifesciences, Best Agrolife, Burnpur Cement, Can Fin Homes, CarTrade Tech, Cosmo Films, Deccan Cements, Emkay Global Financial Services, Finolex Industries, Macrotech Developers, Max India, Pidilite Industries, RPG Life Sciences, Skipper, Snowman Logistics, SRF, Star Cement, Sundaram Multi Pap, Swaraj Engines, Symphony, TeamLease Services, Torrent Pharmaceuticals, and Uttam Galva Steels will also release their earnings report on January 25.
FIIs remain net sellers, DIIs turn net buyers
Foreign institutional investors (FIIs) continued to remain net sellers in the Indian equity market on January 24, while domestic institutional investors (DIIs) turned net buyers. As per the data available on the NSE, FIIs offloaded sold shares worth ₹3,751.6 crore, while DIIs net bought shares worth ₹74.9 crore.
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