Earnings, crude prices, geopolitical uncertainties to drive markets this week: Analysts

Market analysts anticipate that several key factors will shape market trends in the upcoming week including quarterly earnings reports, the performance of the Brent crude oil benchmark, and geopolitical uncertainties in the Middle East.

Santosh Meena, the Head of Research at Swastika Investmart Ltd, emphasised the significance of upcoming earnings reports, especially from major companies, in influencing market direction. The activities of Foreign Institutional Investors (FIIs) will also play a crucial role, given their recent trend of consistent selling.

In recent weeks, foreign investors have withdrawn approximately Rs 9,800 crore from Indian equities due to increasing US bond yields and concerns related to the Israel-Hamas conflict. Despite a volatile market, domestic liquidity has helped the market close on a positive note, with the BSE benchmark index rising by 0.43 per cent or 287.11 points last week.

Vinod Nair, the Head of Research at Geojit Financial Services, noted that the Indian market rebounded from a slow start, primarily driven by optimistic expectations for Q2 earnings and a moderation in global bond yields, even as concerns regarding the Middle East conflict persisted. However, higher-than-expected US inflation data and the resulting increase in treasury yields somewhat tempered the positive trend by the end of the week.

On the macroeconomic front, domestic factors such as a significant drop in Consumer Price Index (CPI) data and impressive industrial production helped to sustain the broad optimism, Nair added.

Retail inflation in the country dropped to a three-month low of 5 per cent in September, while industrial output reached a 14-month high of 10.4 per cent.

However, the market trend was affected by a weak start to the earnings season in the IT sector, which provided subdued revenue guidance, along with rising crude oil prices. Looking ahead, investors will closely monitor the progress of the second quarter earnings season, with high expectations particularly in sectors such as Auto, Finance, and Oil & Gas. 

Additionally, the speech by US Federal Reserve Chair Jerome Powell on October 19 will be a key factor to watch, as the Federal Reserve maintains its stance in favour of one more rate hike by the end of the year to combat inflation.

(With PTI Inputs)