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Q1 FY'22 earnings ignites interest in large caps; to push markets higher

01:46 PM Jul 17, 2021 | Rohit Vaid

Healthy quarterly earnings season along with foreign fund inflows are expected to push India's equity markets higher during the upcoming week.
Accordingly, market observers, opined that healthy earnings announced till now have ignited investors' interest in large caps and expanded volumes, IANS reported.

Lately, Infosys and Wipro have come out with encouraging quarterly numbers.

In the upcoming week companies such as ACC, HCL Tech, Asian Paints, Bajaj Finance, Bajaj Auto, HUL, JSW Steel, ICICI Bank and ITC are expected to come out with their quarterly numbers.

"Indices could continue to edge upwards in the coming week which is a truncated week with a holiday on Wednesday," said Deepak Jasani- Head of Retail Research at HDFC Securities. "Retail investors could do a bit of reshuffling from the smallcaps into mid and largecaps."

Last week, India's equity markets touched new record highs supported by positive US Fed statement and encouraging macro economic data points.

However, rising COVID cases globally continue to instil caution in investors' sentiments.

"Q1FY22 earnings season has started off on a strong note and is providing support to the market. Since restrictions this time around was localised and less stringent versus the lockdown in CY20, the impact in 1QFY22 seems to be contained," said Siddhartha Khemka, Head - Retail Research, Broking & Distribution, Motilal Oswal Financial Services.

"We expect earnings momentum to accelerate in FY22 as the pace of vaccinations picks up and the economy opens up further."

Besides, sector-specific buying in IT, Pharma, and Reality have accelerated in anticipation of strong quarterly earnings.

"We expect this sector-specific momentum to continue during the weeks ahead," said Geojit Financial Services' Head of Research Vinod Nair. "However, lackluster global market and FII net sellers are likely to increase volatility in the market."

According to Joseph Thomas, Head of Research, Emkay Wealth Management: "The healthy set of earning numbers from IT majors has buoyed sentiments. Even as FIIs remained net sellers, the markets have received support from the DIIs. Overall the sentiment is positive as there has been a robust start to the earnings season by the IT companies."

"For the coming week as well the focus would remain on earnings and this factor may dictate the market direction. On the global front, the factors to monitor would be macroeconomic data coming out of the US, such as 'Housing Starts' and 'Jobless' claims."

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