Domestic markets are braced for an action packed Q2 results, there will hits & misses but this quarter earnings would provide an outlook on sales ahead of festive season. Sales on E-commerce websites have already kick started and clocked around USD 2.7 billion worth of sales (Source-The Hindu, RedSeer Consulting). Domestic demand is robust, and outlook is strong. RBI in the recent policy-meeting mentioned to zap out the excess liquidity in the market, but keeping the rates unchanged (our RBI policy analysis). US NFP data came in lower than expectations which is positive for emerging markets but, its unlikely that Fed would change the course of guidance of taper program and rate hikes. Last week, Sensex & Nifty gained back the momentum and closed the week with 2% gains.
TCS reported 3.2% (Q-o-Q) and 15% (Y-o-Y) growth revenue growth, deals signed during the quarter stood at USD 7.6 billion. EBIT margins reported at 25.6% and on yearly basis all the business verticals witnessed double-digit growth.
In the coming week, domestic investors will watch out for IIP, Inflation data and Q2 domestic earnings. US will report inflation data and retail sales which will be keenly watched.
FIIs/FPIs have invested Rs. 131 billion in September 2021 and Rs. 15 billion in October 2021. Foreign Institutional Investors (FIIs) Derivative Statistics have shown a rise in the open interest in stock futures, stock options and Index options. Implied volatility (IV) fell for call options and for put options in the last week. Fall in IV for put option and for call option shows steady support for Nifty at present levels.
Wallstreet indices closed on negative note as investors are concerned about US economic growth. September 2021 non-farm payroll data is underwhelming and most unlikely to change the course of Fed guidance of taper program and rate hikes. Rising UST caused a sell-off in equities especially in tech stocks. Benchmark US 10-year Treasury rose to above 1.6% on Friday, the highest in 4 months. During the week, Dow Jones gained by 1.22%, Nasdaq up by 0.2%, and S&P 500 rose by 1%.
Cloud of uncertainties dampened the European investors sentiment, as inflationary pressures building from energy markets, tech shares back on a roller-coaster ride amid soaring yields. During the week, FTSE gained by 1% and DAX up by 0.33%.
Brent crude prices crossed USD� 80 per barrel during the week on the back of soaring natural gas prices and as OPEC+ decided early in the week to stick with its planned 400,000 bpd increase in crude output quota for November, despite pressure from some countries including the US and India to add more supply to stabilize prices. Crude prices witnessed 7 consecutive weekly gains which was last seen in 2013. During the week, Brent crude prices gained by 4%.
Global Economy
The US economy added 194,000 jobs in September 2021, the lowest so far this year and well below forecasts of 500,000 and unemployment rate dropped to 4.8% in September 2021.
The trade deficit in the US widened to a record high of USD 73.3 billion in August 2021, higher than market forecasts of USD 70.5 billion. Exports edged up 0.5% to USD 213.7 billion and imports were up 1.4% to a new all-time high of USD 287 billion.
US crude oil inventories rose by 2.346 million barrels in the week ending 01st October 2021, a second straight period of increase and compared with market forecasts of a 0.418 million drop, data from the EIA Petroleum Status Report showed.
The Caixin China General Services PMI jumped to 53.4 levels in September 2021 from 46.7 levels in the prior month, moving away from the lowest level seen since the height of the pandemic last year.
ECB policymakers discussed a bigger cut in asset purchases and some even argued that markets were already expecting an end of stimulus by March 2022, minutes from the ECB September 2021 monetary policy meeting showed.
