Stimulus, healthy macros expected to lift markets

Expectations for new stimulus measures along with healthy macro-economic data will push India's equity markets higher during the coming week, analysts said.

Accordingly, investors are betting on the new stimulus measures being announced in the US and India to accelerate economic activity.

Besides, recently released auto sales numbers and macro economic data points also indicate towards a sustained economic recovery.

"In the coming week, we will have a tug-of-war between a series of encouraging macro numbers in India, including PMI, monsoon, auto sales numbers, September trade deficit numbers, rail freight, power consumption, fuel sales, GST collections, coal despatches, and on the other hand we have the global nervousness due to Dolnald Trump getting infected with Covid-19," said Deepak Jasani, Head of Retail Research at HDFC Securities.

"We think the positive India macros will have an advantage and the Indian markets could rise some more," he added.

Jasani said that sectors which have underperformed so far could do well, including banks and realty, among others.

"Select small and midcap stocks could continue to perform. Now onwards, the focus will also shift to Q2 results that will kick off in the coming week," Jasani said.

As per schedule, the Q2FY21 results season will begin from October 5.

IT major TCS is expected to come out with its quarterly results on Wednesday.

Apart from quarterly results, markets will also get direction from the decision on the loan moratorium case on Monday.

"The second quarter results would also begin next week with TCS reporting its numbers on Wednesday," said Siddhartha Khemka, Head, Retail Research, Motilal Oswal Financial Services.

"Decent auto sales numbers for the month of September also provided support to the market. Going ahead, the market may continue with its positive trend in near term amid hopes of stimulus announcement — both from the US government and the Indian government," Khemka said.

According to Vinod Nair, Head of Research at Geojit Financial Services: "The market is expected to be guided by announcement of stimulus measures by the US and the outcome of the Supreme COurt moratorium hearing."

"We expect Unlock 5.0 to boost investor sentiments for the media and the tourism sectors which had fallen significantly since the lockdown. Investors should remain cautious, as markets are keenly focusing on the court hearings on moratorium to be held next week and volatility might spike once again," Nair said.

Last week, Indian markets gained on the back of positive global cues, better-than-expected domestic macro numbers and decent auto sales in September.

The risk appetite also improved as the Central government on October 1 issued new guidelines for opening up of more activities in areas outside the containment zones.

Consequently, the NSE Nifty50 closed the week higher by 3.3 per cent, while the BSE Sensex gained by 3.5 per cent.

The equity markets ended higher on 3 out of the 4 trading days during the truncated trade week..