Market’s underlying trend firm but all eyes on Karnataka election outcome

This week, the domestic markets will be highly impacted by the outcome of Karnataka Elections 2018 and major corporate earnings scheduled. Companies such HUL, RCom, Britannia Industries, fraud-hit PNB, Lupin, TVS Motor Company, ITC, JSW Steel, Bajaj Finance, Bajaj Finserv, Voltas and Bajaj Auto will declare their results.

Market will be eyeing the macroeconomic data with WPI numbers for food, fuel, manufacturing, inflation and inflation (CPI) along balance of trade. Again on Tuesday, 15 May 2018, a heightened volatility and liquidity may be seen in Indian equity and forex markets as three major things scheduled for the single day- Karnataka Elections 2018 results; Q4 results of scam-hit Punjab National Bank; the balance of trade data will be announced. Other influencing factors this week are expected to be global cues such as volatility in global crude oil prices which will also impact investors' risk-taking appetite. The next phase of results will be crucial as any deviation will create further downgrades. Surging oil prices and weak INR are expected to impact inflation while easing geopolitical tension will add fuel to the market.

Domestic equity markets have been mostly rising for more than a month irrespective of FPI’s exiting the stocks on the back of revival in the Q4 results with relatively positive global cues. The BSE Sensex  and NSE Nifty have risen 8 to 9% in the course of the last one-half-and-month.

In terms of investments, last week's provisional figures from the stock exchanges showed that foreign institutional investors sold scrips worth Rs 2,126.74 crore. Similarly, figures from the NSE revealed that foreign portfolio investors (FPIs) divested equities worth Rs 2,678.35 crore, or $399.75 million, in the week ended May 11.

Conversely, on technical charts, the underlying trend for the National Stock Exchange's (NSE) Nifty remains firm with the Nifty surging higher and closing above the 10,800 points levels.Further upsides are likely once the immediate resistance of 10,878 points is taken out. Crucial supports to watch for any weakness are at 10,635 points.

Last week, healthy Q4 earnings and positive global cues including easing tensions between the US and North Korea lifted the key Indian equity indices. However, caution prevailed ahead of the assembly elections. On a weekly basis, the barometer 30-scrip BSE Sensex rose by 620.41 points or 1.78 per cent to close at 35,535.79 points. The NSE Nifty ended last week at 10,806.50 points, up 188.25 points or 1.77 per cent from its previous week's close.