Market Ahead, January 28: Top factors that could guide markets today

The stock market bears are likely to tighten their grip on Dalal Street today as indices look set to start on a gap-down note, tracking the bloodbath in the US equities in the overnight session. At 7 am, Nifty futures on the Singapore Exchange traded nearly 120 points down at 13,862.

US equities tumbled last night, logging their biggest percentage drop in three months, as a risk-off mood descended on amid growing concern that stocks have become overvalued. Adding to the market worries was the outcome of the Federal Reserve’s policy meeting.

While the Fed kept settings unchanged as expected, policymakers flagged a concerning slowdown in the pace of the economic recovery. Fed Chairman Jerome Powell said at a press conference that the U.S. economy was a long way from full recovery and still short of policymakers’ inflation and job goals.

On Wall Street, the benchmark S&P 500 index fell nearly 2.57%. The Dow Jones Industrial Average fell 2.05% and the Nasdaq Composite dropped 2.61%.

Consequently, Asian and US equity futures were trading on a tepid note in early morning session on Thursday. Japan’s Topix index declined 1.1%, South Korea’s Kospi was down 1.2% and Australia’s S&P/ASX 200 Index sank 2.2%. The futures of S&P 500 index were down 0.2%.

That apart, three straight days of selling by foreign institutional investors, the longest stretch since October, might also concern investors back home. FIIs sold equities worth Rs 1,688.2 crore on Wednesday, taking the three-day total to Rs 3,089.21 crore.

Now, a look at the stock-specific developments that are likely to sway the market today:

Maruti Suzuki. Lupin, InterGlobe Aviation, Angel Broking, IRCTC, Tata Chemicals, and TVS Motor Company are among 129 companies slated to announce their December quarter earnings later today.

Maruti Suzuki is expected to post a healthy set of numbers for the December quarter. Analysts are building up to 30 per cent year-on-year (YoY) growth in the company’s bottom-line while revenue is seen growing in the early teens.

As for IndiGo, Street is baking in strong sequential growth amid improved traffic and cost-saving measures. The figures, however, may be half of the previous year.

Axis Bank reported a 36 per cent decline in net profit at Rs 1,117 crore in the December quarter compared with Rs 1,757 crore a year ago, due to higher provisions. Reported numbers were below the Street’s estimate of Rs 1,500 crore. Net interest income, meanwhile, rose 14 per cent YoY to Rs 7,373 crore.

Hindustan Unilever posted an 18.87 per cent YoY rise in its standalone net profit at Rs 1,921 crore in the December quarter. The revenue from the sale of products came in at Rs 11,682 crore, up 20.48 per cent YoY and 3.6 per cent quarter-on-quarter (QoQ).

Stocks of multiplex operators will be in focus after the Ministry of Home Affairs (MHA) on Wednesday allowed cinema halls and theatres to operate with more people. At present, cinema screens are operating with 50% seating restrictions.

Aditya Birla Fashion and Retail has announced a strategic partnership with designer brand Sabyasachi by signing a definitive agreement for acquiring 51% stake in Sabyasachi brand.

Union Bank of India will raise Rs 205 crore by issuing Basel III compliant bonds later this week. The bank is issuing Basel III compliant perpetual debt instruments in the nature of debentures on a private placement basis.

SBI Card on Wednesday said its Managing Director and CEO Ashwini Kumar Tewari has resigned pursuant to his appointment as MD of State Bank of India.

Lastly, an update on the primary market. The initial public offer of Stove Kraft was subscribed 2.93 times on Wednesday, the second day of bidding. The issue closes for subscription today.

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