Corporate results to be next big trigger for markets

All eyes this week will be on corporate performance of big companies like Tata Consultancy Services (TCS) and Reliance Industries, which will set the future trend of the equity market.

TCS will announce its results on Thursday, April 16, and Reliance Industries will declare its full-year results a day later. The other results that the market would look out for this week will be ACC, IndusInd Bank, Mindtree and Crisil.

The week will likely see the equity market open higher after data for the Index of Industrial Production (IIP) beat street expectations by recording a 5 per cent growth for February 2015, the highest in the last three months. The market was expecting IIP to grow around 3-3.5 per cent. The other positive for the Indian market is Greece repaying $494 million to the International Monetary Fund (IMF). Though Greece has made payment to the IMF, at the ground level things haven't changed and the country is negotiating with its euro-zone creditors to get more aid before the indebted government runs out of cash.

Last week, the Indian equity market jumped towards the end following revision of the country's rating outlook by Moody's to positive from stable. This will significantly boost market sentiments and, more importantly, assure foreign inflows into the country. Till foreign institutions keep a positive outlook on India, the stock market will keep moving upwards.

Among other domestic economic data this week, India will declare its March 2015 consumer price index (CPI) data on Monday and wholesale price index (WPI) for the same month a day later. Indian financial markets are closed on Tuesday on account of Dr Ambedkar Jayanti.

In global events, the European Central Bank (ECB) meets on Wednesday, April 15, to decide on interest rates. On Thursday, China will announce its first quarter GDP data.

FII funds have been the lifeline of the Indian market. If foreign investors continue to pump in money into Indian equities, the market will keep surging irrespective of what happens. In the past three months FIIs have invested over $6 billion. Investors have been waiting to come to India but want the Narendra Modi government to push through key reforms and streamline administrative process to kick-start the stalled processes in areas of infrastructure, power, roads and housing. FIIs will continue to invest if the Indian economy records robust growth.

With corporate India not out of the financial mess and benefits of the rate cut likely to be visible only after five-six months, investors should follow an asset allocation strategy rather than dabbling with different investment products. With limited options, investors should have a balanced approach between equities and debt. However, after a great year, the outlook should be one of guarded optimism and investors must not get carried away with last year's performance.

One way of diversifying this year could be dividing equity and debt investments with a minimum exposure of 30-40 per cent in debt and 60-70 per cent in equities. It is a great time to build a strong portfolio and every fall should be taken as an opportunity to add blue-chip and large-cap counter.

(For more suggestions on investments, go to businesstoday.in/investment2015).