Q2 earnings, global trends, foreign investors trading activity key drivers for markets

New Delhi: Quarterly earnings from corporates, global trends, and trading activity of foreign investors will guide market sentiment this week, analysts said, adding that benchmark indices may face volatile trends.

"The upcoming release of Q2 results will be closely watched, providing insights into corporate performance. Meanwhile, the escalating tensions between Israel and Iran introduce a significant geopolitical risk, potentially leading to increased oil prices and market volatility. Foreign Institutional Investors (FIIs) have been a key driver of the Indian market's performance, and their stance will depend on factors such as global economic conditions, and domestic political developments," said Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd.

HDFC Bank on Saturday reported a 6 per cent increase in September quarter net profit to Rs 17,825.91 crore on a consolidated basis.

On a standalone basis, the largest private sector lender's post-tax net grew to Rs 16,820.97 crore during the reporting period, as against Rs 15,976.11 crore in the year-ago period.

"In the absence of any major triggers, market participants will focus on upcoming earnings for direction. First, they will react to the results of banking heavyweights such as HDFC Bank and Kotak Bank. Later, companies like ITC, Hindustan Unilever, BPCL, HPCL, and Ultratech Cement will also announce their earnings," said Ajit Mishra, SVP, Research, Religare Broking Ltd.

Bajaj Housing Finance, Adani Green Energy, Bajaj Finance, One97 Communications, Zomato, Bajaj Finserv and Bank of Baroda would also announce their earnings this week.

Kotak Mahindra Bank on Saturday posted a 13 per cent growth in September quarter profit to Rs 5,044 crore, helped by performance of its subsidiaries.

On a standalone basis, the private sector lender's net profit for the quarter grew 5 per cent to Rs 3,344 crore, limited by a jump in provisions.

"Geopolitical uncertainty, coupled with sluggishness in the Chinese economy and persistent FII outflows from the domestic markets, have led to caution," Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said.

Massive foreign fund exodus from the domestic markets dragged the benchmark indices lower last week.

Last week, the BSE benchmark declined 156.61 points, or 0.19 per cent, and the Nifty went lower by 110.2 points, or 0.44 per cent.

"The trend of FII selling and DII (Domestic Institutional Investors) buying is likely to sustain in the near-term. The rationale behind FPIs (Foreign Portfolio Investors) selling is the elevated valuations in India and the cheap valuations of Chinese stocks, which the FPIs have been buying aggressively since mid-September," V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.