HOLIDAY’S OVER AND WHAT LAY AHEAD NOW?

By Ruma Dubey

As such Monday’s are very blue but this time around, after the long and festive weekend, today’s Monday has a deeper hue of blue. But it is going to be a news-filled week and one might not have any time left to rue over the end of holidays.

First things first, today we will have the listing of India Energy Exchange, the first IPO ever by a power exchange in India. It had priced its IPO at the upper end at Rs.1650/share and was subscribed 2.28 times.  And then on Wednesday, there will be the much awaited listing of GIC on Wednesday.  The mammoth Rs.11,370 crore IPO was subscribed 1.38 times. Its IPO price was at Rs.912/share.

There is more action from the IPO market – a new IPO will open on 25^th – Reliance Nippon Life Asset Management. With an issue size of Rs.1542 crore, priced between Rs.247-252 per share, the issue will close on 27^th.

In the secondary market, all sentiments will be ruled by the Q2FY18 earnings. This week alone, some 182 companies are scheduled to announce their numbers but most keenly watched would be the bank earnings and Infosys.

This week will see Q2 earnings of almost all the biggies- ICICI Bank, HDFC Bank, Yes Bank, Kotak Bank, IDFC Bank, RBL Bank and in the PSU sector – only Canara Bank and Vijaya Bank.

The bank Q2 numbers will truly decide the course of the market – if numbers come in weak like the one presented by Axis Bank, the moods will remain somber. All eyes will be on the NPA – it is naïve to assume that Q2 will magically see all NPA issues resolved; in fact it would be no surprise to see banks making increased allocations to resolve the NPA issue once and for all. The news doing the rounds today morning is that banks are staring at additional NPA of Rs.40,000 crore following recent classification of eight consortium accounts of Axis Bank as NPAs by the RBI. As we said, bank numbers will decide the moods of the market this week.

Then there is Infosys. It does not hold the sway on the market that it did earlier as market has for now discounted the fact that it is grappling with serious internal issues. Till those are resolved, expectations would be muted yet all will look at the future estimates and that will decide its future course on the bourses.

Overall, the Q2 earnings are expected to reflect the effect of GST implementation from 1^st July and these numbers, should more or less, end all debate about whether or not GST had an impact. RBI released the minutes of its MPC meet on Wednesday and Urjit Patel has clearly spelt out that GST has made the outlook for manufacturing sector very uncertain and one would need more data to assess headwinds to India’s overall GDP.

Earnings apart, another important fact will hold sway over the markets – the F&O contracts for Oct on the NSE will expire on Thursday; like always, traders will roll-over their positions in November series but this will keep the session very volatile during the last two days.

Global cues will remain significant but nothing game changing is expected. The ECB is scheduled to meet on Thursday and as usual, most are expecting a stimulus package to be announced for 2018.  That will lift up the moods but direct benefit to India is limited. It would also be interesting to see how companies – especially car, home and white goods companies benefitted from the Diwali festival. That, to some extent will impact individual companies.

So as we get back to life this week, this is what to expect in the coming 5 days. It looks like a week of “consolidation.”