As India Inc begins to unveil its performance for Q4 and FY 24, anticipation mounts for stock-specific movements. TCS leads the pack, set to release its numbers post-market today. A widespread sell-off drove the Sensex and Nifty down by 1% on April 12. Investor sentiment waned following higher-than-anticipated US inflation figures, dimming hopes for a June rate cut and sparking a surge in treasury yields.
While analysts anticipate a further rally driven by domestic liquidity, a period of consolidation is expected as companies prepare to disclose their fourth-quarter financials, with TCS expected to lead the charge after market hours.
The Sensex closed down by 749.33 points, or 1%, at 74,288.82, while the Nifty slipped by 223 points, or 0.98%, to 22,530.80.
Market breadth favored decliners, with around 1,272 shares advancing, 2,000 declining, and 67 unchanged.
Experts foresee heightened activity in individual stocks as earnings reports start pouring in. Following TCS, investors await results from Bajaj Auto, HDFC Life, and Infosys on April 18.
According to a Moneycontrol survey, TCS’ profit is expected to rise by 5.8% sequentially, with revenue increasing by 1.5%.
Key areas of interest in management commentary include the deal pipeline, demand trends, and future growth prospects.
Despite the ongoing record highs in the markets, analysts see limited catalysts to further boost valuations.
Vinay Paharia, CIO at PGIM India Mutual Fund, suggests that market focus will shift to companies’ ability to grow cash flows and earnings. He added, “The select group of companies that can deliver on that count may continue to benefit from the broader macro and demographic tailwinds.”
According to Sameet Chavan, Head of Research, Technical, and Derivatives at Angel One, the correction could be either time-wise or price-wise. A price-based correction might trigger profit-taking across the broader market, while a time-wise correction could keep the benchmark index range-bound while individual stocks outperform.
“In the midst of this uncertainty, it is advisable to avoid aggressive bets and instead continue with disciplined, stock-specific trades, ensuring proper exit strategies are in place,” Chavan advised.
Broader markets also witnessed profit-booking on April 12, with the BSE Midcap and BSE Smallcap indices declining by up to 0.6%. India VIX, which measures near-term volatility, rose by more than 3% to 11.5.
All sectors experienced a downturn, with Nifty Pharma, Nifty PSU Bank, and Nifty FMCG indices being the hardest hit, each slipping by over 1%.
Given the circumstances, market experts recommend investing in high-quality large caps and midcaps, where the margin of safety is higher.
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