Markets are expected to open on a weak note on Monday, as all eyes are on Tata Consultancy Services (TCS), which will unveil its FY23 second-quarter results later today.
Vinod Nair, Head of Research at Geojit Financial Services, said: "The market's attention will be on quarterly earnings in the coming week, particularly for IT stocks. Additionally, the domestic market's movement would be significantly affected by the inflation data that is anticipated for release next week. It is estimated that domestic inflation will continue to be high in September at 7 per cent, similar to the previous month."
Global headwinds
Indian markets are currently having a roller coaster ride as global headwinds continue to drag the strong domestic fundamentals, said Prabhudas Lilladher Pvt Ltd.
"Rising Gas prices and disruption in global supply chains (Russia Ukraine war) are driving inflation to 15-20 year high in developed markets. Hawkish stance by the Fed and other central banks is likely to push interest even higher in the coming quarters. Shortage of Gas and rising interest rates are likely to impact demand with rising fears of a recession in US and Europe. We expect global macro-economic situation to remain volatile in coming 3-6 months unless there is an end to Russia Ukraine war," said the domestic brokerage in its India strategy report.
‘FII selling to moderate’
According to Motilal Oswal India Strategy report, "Given the multiple moving parts (rates, currency, bonds, and geopolitics), we expect volatility to remain elevated but directionally, we believe, trends will get better. In this context, we expect domestic equity inflows to remain robust and at the margin, as global climate gets better, FII selling can moderate too".
Despite a sharp fall in the US markets on Friday, Asian markets are relatively stable in early deals on Monday. However, SGX Nifty at 17,040 indicates nearly a 300-point gap down opening for Nifty futures, which on Friday closed at 17,325.
Nikkei is down 0.7 per cent in an early deal on Monday even as Australia, Taiwan and New Zeland are down 1.2-1.7 per cent and Hong Kong tumbled over 2.2 per cent.
‘Nifty target: 20936’
Prabhudas Lilladher estimates NIFTY EPS at 855.2 and 963.4 and introduce FY25 EPS at 1069.2. This shows a growth of 12.1/12.7/11.0 per cent for FY23/24/25.
"Nifty is currently trading at 19x one year forward PE which is a 7.8 per cent discount to 10-year average of 20.5. Base case: we value NIFTY at last 10-year average PE of 20.5x on Sept24 EPS of ₹1016, and arrive at Sept 23 NIFTY target of 20936 (20057 earlier). Bull Case: we value Nifty at 10% premium to 10-year average PE (21.5x) and assign a target of 22918. (22063 earlier). Bear Case – we value NIFTY at 20% discount to 10-year average and arrive at a target of 15800 (16046 Earlier)."