Markets to Keep an Eye on Q2 Earnings, US-China Trade Talks this Week

Indian stock markets are gearing up for the earnings season yet again. The holiday-shortened week will see IT bellwethers Infosys and Tata Consultancy Services Ltd (TCS), along with banking major IndusInd Bank, releasing their second quarter (Q2) earnings. Notably, stock markets will remain shut on Tuesday, 8 October, on account of Dussehra.

Last week, benchmark indices BSE Sensex and Nifty 50 snapped their three-week rally to close down nearly 3%. A lower-than-expected repo rate cut along with reduction in forecast for full-year economic growth by the Reserve Bank of India (RBI) dampened investor sentiment. Besides that, concerns deepened over the health of India’s banking sector due to the PMC Bank-HDIL fraud and RBI’s prompt corrective action against Lakshmi Vilas Bank.

According to analysts, markets may continue to remain volatile this week as the September quarter earnings season is unlikely to hold any major surprise.

“The earning season for Q2FY20 is unlikely to throw any surprises. RBI’s downward revision of GDP (gross domestic product) growth to 5.3% for Q2FY20 from earlier 5.8-6.6% in H1FY20 says it all,” Pankaj Bobade, Head of Fundamental Research, Axis Securities told Moneycontrol. “All eyes would now be on the management commentary to understand how they see the performance for the rest of the year,” he added.

TCS will announce its quarterly results on Thursday, 10 October, while Infosys will release its numbers on Friday, 11 October. Brokerages feel earnings are expected to be steady for both the companies during the September quarter with constant currency revenue growth at around 3% each.

Besides earnings, traders will also keep a watch on the industrial production data for the month of August that will be released on Friday. To recall, industrial output had grown 4.3% month-on-month (MoM) in July against 1.2% in June.

Internationally, officials from the US and China will be meeting later this week to strike a trade deal. A high-level Chinese delegation is visiting the US for a two-day meeting starting 10 October for talks with officials from Donald Trump’s administration. Last week, Trump had said that there was a good chance of the US making a deal with China. “Right now, we are in a very important stage in terms of possibly making a deal. If we make it, it will be the biggest trade deal ever made,” Trump added.