IT stocks likely to stay positive, investors should keep off insurance for the short-term
It was a roller coaster ride for the market last week. We saw huge volatility due to uncertainty in global markets and a rising fear of a third wave of the pandemic. The S&P Sensex was down by 0.30 per cent and Nifty50 was down by 0.40 per cent. Bank Nifty was down 3.1 per cent mainly due to inflationary pressure and the IT sector was up 1.3 per cent because of positive quarterly earnings and heavy demand in this sector.
In the coming week, Indices are expected to remain range-bound and investors should keenly track the result of the US federal reserve monetary policy meeting, while the delta variant of Coronavirus might create a negative impact on the economy and, in turn, on the indices. The overall expectation of positive earnings in the June quarter can add 200 points to the Nifty.
Major events in the coming week
June earnings of ITC, Britannia and Nestle will be keenly watched, and the market will react to these on Monday.
Axis Bank, DLF, Kotak Mahindra Bank, Larsen & Toubro, SBI Life Insurance and Tata Motors will also be in focus as they are set to announce their June quarter earnings on Monday. The earning of all the results will drive the market next week. Also, crude oil looks positive due to supply contraction and growing demand.
The IT sector will continue to see positive momentum because of positive earnings and overall robotic demand.
The pandemic has hit the balance sheet of the leading non-life insurance companies and many companies have to make a net payout to the victims. The June quarter revenue has gone up but at the same time insurance settlement has increased which has created a little panic in this sector for the short term. So, investors should avoid this sector for the coming week.
The coming days will be really crucial for this sector because of the June quarter earnings of heavyweight stocks like Britannia Industries, Nestle India and ITC due next week.
This sector will be little range-bound and will depend totally on the upcoming quarterly results of Axis Bank and Kotak Mahindra Bank, which are due on Monday. Investors can have a look at ICICI bank because of the healthy growth in profit and increase in the net interest margin.
This sector will also move narrowly range-bound due to a slowdown in mining work, but investors can go for JSW Steel because of record profit and increase in revenue.
The author is an Assistant Director at ITM B-School
DISCLAIMER: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.