Coronavirus, macro data, FII flow, Delhi poll outcome among factors guiding D-Street next week

The week gone by saw the equity indices register nearly 4 per cent gain on the back of falling oil prices, some positive policy decisions from the Reserve Bank of India and the government and hopes of hefty corporate dividends.

In the week ahead, Dalal Street could be guided by inflation data, clarity on the coronavirus impact and the verdict of Delhi Assembly Polls.

Traders will also keep an eye on the December quarter earnings season, which has reached its final leg.

Here are factors that may guide D-Street next week:

Q3 earnings in last leg
In the last week of December quarter earnings season, as many as 2,330 companies are set to announce their numbers this week, including nine Nifty firms. Bharat Forge, GAIL (India), Motherson Sumi Systems and MRF will unveil their results on Monday; 3M India and BHEL on Tuesday; PFC on Wednesday; BPCL, Nestle India, Page Industries and Vodafone Idea on Thursday and Balkrishna Industries, Glenmark Pharmaceuticals and Steel Authority of India on Friday.

Coronavirus scare grips market
Fast increasing death toll and number of infections touching nearly 35,000, markets are fearing more-than-expected impact of the coronavirus. Many global research agencies have downgraded their growth projections for China and the world. S&P Global Ratings has cut China's 2020 growth forecast to 5 per cent from 5.7 per cent.
Nomura’s China team has pegged China’s GDP growth to drop to 3.8 per cent in March quarter from 6 per cent in December quarter. It said nine out of the top 10 virus vulnerable countries in Asia include India.
UBS has cut its global GDP forecast for March quarter to 0.7 per cent from 3.2 per cent in December quarter.

FIIs selling equities
Foreign Institutional Investors (FIIs) were net sellers in the equity segment during the week gone by, with gross purchases of Rs 39,499.82 crore and gross sales of Rs 40,672.38 crore, leading to a net outflow of Rs 1,172.56 crore. The outflow that comes following the Budget reflects what foreign fund managers think about market outlook. If they continue booking profit, with added fear of coronavirus, it could hurt sentiments on Dalal Street.

Inflation data to be out
Market participants would be eyeing the data of Consumer Price Index (CPI) and Index of Industrial Production (IIP), which will be released on February 12. Traders will also be looking forward to the Wholesale Price Index (WPI) for January, which will be released on February 14. Wholesale prices in India increased 2.59 per cent year-on-year in December 2019 from 0.58 per cent in the previous month and market expectations of a 2.15 per cent rise.

Delhi assembly poll outcome
Vote count for Delhi Assembly polls is scheduled for Tuesday. Exit polls are indicating another landslide win for the Arvind Kejriwal-led Aam Aadmi Party, which will be a setback for the Bharatiya Janata Party, which rules at the Centre. Dalal Street will closely watch if the actual results spring a surprise.

Massive fall in oil prices
Oil prices posted their fifth straight weekly decline, as speculators have backed away due to weaker consumption figures and expectations that the coronavirus will remain a drag on demand. Brent crude sank 6.3 per cent for the week to settle at $54.47 a barrel. Russia said it needed more time before committing to output cuts sought by other large producers, which also dragged the crude prices. Cheaper crude oil bodes well for India’s already strained fiscal maths asit imports above 80 per cent of its needs.

RBI’s virtual ‘rate cut’
The Reserve Bank of India in its last bimonthly monetary policy meeting of this fiscal, kept policy rates unchanged, but announced a number of measures that might work as a booster shot for the economy. To enable better transmission of its monetary policy, RBI introduced Long Term Repo Operation. RBI said it will conduct long-term repo operations (LTRO) from the fortnight beginning on February 15, at the policy rate. This is an attempt by the central bank to manage bond yields and push transmission of earlier rate cuts. Shorter duration government bond yields plunged on Thursday after the Reserve Bank of India announced the LTRO.