Performance of monsoon rains, progress on GST bill to dictate trend
Next batch of Q1 June 2016 corporate results, the progress of the monsoon rains, trend in global financial markets and outcome of monetary policy review from central banks in the US and Japan will dictate near term trend on the bourses. The market may remain volatile as traders roll over positions in the futures & options (F&O) segment from the near month July 2016 series to August 2016 series. The near month July 2016 F&O contracts are set to expire on Thursday, 28 July 2016.
A number of prominent companies are scheduled to announce their Q1 June 2016 results in the last week of July 2016. Maruti Suzuki India, Zee Entertainment Enterprises, Bharti Infratel and Dr Reddy's Laboratories are scheduled to unveil Q1 results on Tuesday, 26 July 2016. On the same day cement makers ACC and Ambuja Cements will unveil Q2 June 2016 results. Bharti Airtel, HDFC, Asian Paints, Yes Bank and Bajaj Auto are scheduled to unveil Q1 results on Wednesday, 27 July 2016. Eicher Motors unveils its Q1 results on Thursday, 28 July 2016. ICICI Bank and Larsen & Toubro are set to announce Q1 results on Friday, 29 July 2016.
The performance of the monsoon rains is being keenly watched. For the country as a whole, the cumulative rainfall was 1% above the long period average (LPA) until 21 July 2016. Region wise, except East & Northeast India where it was 17% below LPA, monsoon was above the long period average in all the other three regions. The quantum of the rainfall and its spatial and temporal distribution are critical for the country's agriculture. Around 70% of the country's farmlands are rain-fed. India Meteorological Department (IMD) has forecast rains to be above normal in July and August 2016.
Meanwhile, investors are awaiting the progress on the Goods and Services Tax (GST) constitutional amendment bill in parliament. As per media reports, the GST bill has been listed for discussion in the Rajya Sabha during the last week of this month. The GST bill, which has been approved by the Lok Sabha is pending in the Rajya Sabha because of opposition to the bill in its current form by the Congress party. A constitutional amendment bill requires at least 50% attendance and support of two-third of those present and voting in the house. For the GST bill to become a law, the bill also needs to be approved by half the state assemblies after its passage in the parliament. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. The month-long monsoon session of the parliament will conclude on 12 August 2016.
On the global front, the Federal Open Market Committee (FOMC) is widely expected to keep the benchmark fed funds rates unchanged after the conclusion of two-day monetary policy meeting on 26-27 July 2016. Market participant will scrutinize the Fed statement to gauge the outlook on US monetary policy. The Fed has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015.
Japan's central bank Bank of Japan (BOJ) undertakes monetary policy review on 28-29 July 2016. Market expectations of aggressive monetary easing from the BOJ have receded after comments by BOJ Governor Haruhiko Kuroda. In an interview to a British radio station taped in mid-June and broadcast on 21 July 2016, Kuroda has ruled out the idea of using helicopter money -- or directly underwriting the budget deficit -- to combat deflation.
A number of prominent companies are scheduled to announce their Q1 June 2016 results in the last week of July 2016. Maruti Suzuki India, Zee Entertainment Enterprises, Bharti Infratel and Dr Reddy's Laboratories are scheduled to unveil Q1 results on Tuesday, 26 July 2016. On the same day cement makers ACC and Ambuja Cements will unveil Q2 June 2016 results. Bharti Airtel, HDFC, Asian Paints, Yes Bank and Bajaj Auto are scheduled to unveil Q1 results on Wednesday, 27 July 2016. Eicher Motors unveils its Q1 results on Thursday, 28 July 2016. ICICI Bank and Larsen & Toubro are set to announce Q1 results on Friday, 29 July 2016.
The performance of the monsoon rains is being keenly watched. For the country as a whole, the cumulative rainfall was 1% above the long period average (LPA) until 21 July 2016. Region wise, except East & Northeast India where it was 17% below LPA, monsoon was above the long period average in all the other three regions. The quantum of the rainfall and its spatial and temporal distribution are critical for the country's agriculture. Around 70% of the country's farmlands are rain-fed. India Meteorological Department (IMD) has forecast rains to be above normal in July and August 2016.
Meanwhile, investors are awaiting the progress on the Goods and Services Tax (GST) constitutional amendment bill in parliament. As per media reports, the GST bill has been listed for discussion in the Rajya Sabha during the last week of this month. The GST bill, which has been approved by the Lok Sabha is pending in the Rajya Sabha because of opposition to the bill in its current form by the Congress party. A constitutional amendment bill requires at least 50% attendance and support of two-third of those present and voting in the house. For the GST bill to become a law, the bill also needs to be approved by half the state assemblies after its passage in the parliament. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. The month-long monsoon session of the parliament will conclude on 12 August 2016.
On the global front, the Federal Open Market Committee (FOMC) is widely expected to keep the benchmark fed funds rates unchanged after the conclusion of two-day monetary policy meeting on 26-27 July 2016. Market participant will scrutinize the Fed statement to gauge the outlook on US monetary policy. The Fed has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015.
Japan's central bank Bank of Japan (BOJ) undertakes monetary policy review on 28-29 July 2016. Market expectations of aggressive monetary easing from the BOJ have receded after comments by BOJ Governor Haruhiko Kuroda. In an interview to a British radio station taped in mid-June and broadcast on 21 July 2016, Kuroda has ruled out the idea of using helicopter money -- or directly underwriting the budget deficit -- to combat deflation.
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