Markets This Week: Profit Booking Is Possible

Benchmark indices ended the week higher, making it two successive week of gains, after seven successive week of losses. Looking at the news emanating it is highly possible that we may see some profit booking this week.

What led to the rally last week?

There were reports that the Gilead Sciences' remdesivir has led to quick recoveries in symptoms of Covid-19 patients in a clinical trial. This saw a fast and furious rally across the US, Asian and European markets. Nothing is conclusive at the moment though.

Almost of the global markets closed with gains and India followed. It was also a truncated week in India. Apart from this the Indian markets saw a solid rally on Friday, following RBI measures to ease liquidity.

Factors that will impact markets next week

To begin with, Covid-19 infections continue to rise. US President Donald Trump warned on Saturday that China could face consequences if it was "knowingly responsible" for the coronavirus pandemic.

"It could have been stopped in China before it started and it wasn't," Trump told reporters at a White House briefing. "And now the whole world is suffering because of it."
Rhetoric from around the world, would ensure volatility for the global markets. Apart from this, if infections continue to rise in India, it could dampen sentiments. In India, total covid-19 infections have crossed the 15,000 mark.

Quarterly numbers and government stimulus awaited

Quarterly numbers from corporates would be awaited, though nothing much is expected. ACC, Infosys and Tata Elxi are set to report numbers on April 20. Commentary from Infosys would be important and it would be important to watch if there is a guidance from the company.

HDFC Bank would be reacting to its numbers. HDFC Bank Net Profits rose 17.7 per cent to Rs 6,928 Crores for the quarter ending March 31, 2020. Net interest income for the quarter grew to Rs 15,204 crore from Rs 13,089 crore, driven by 21.3 per cent growth in advances and a 24.3 per cent growth in deposits.

Marketmen are also eagerly awaiting a second government stimulus, which is highly possible this week. In all likelihood it would involve some respite for the MSME sector.
Investors should also watch for weakness in the rupee, which does lead to some reaction in the stock markets as well. For the last few sessions, Foreign Portfolio Investors have begun selling stocks all over again in the cash markets, which is not good news.

All in all, volatility is unlikely to go away very soon and investors should invest only with a long-term perspective in mind.