Markets to focus on earnings, RBI policy

● FPI outflows may keep the indices under pressure

- FE BUREAU

DESPITE A NUMBER of positive announcements in the Budget, the stock markets failed to cheer on Saturday, with the benchmark indices ending flat. Barring FMCG, real estate and consumer-driven sectors—expected to benefit from tax-cut measures—most other sectors saw a limited movement. Shares in infrastructure, oil & gas and energy sectors experienced some decline.

For most market experts, the worry is not tepid corporate earnings. With profit growth in the first nine months languishing in single digits, foreign portfolio investors (FPIs) have turned wary. Besides, many US-based FPIs are reallocating their funds from emerging markets after Donald Trump took charge as the president.

"With FPIs moving out of emerging markets because of a slowdown in the Chinese economy, the money coming into India will also suffer. While there are some India-centric funds, their corpus isn't very big," said Nilesh Shah, MD, Kotak Mutual Fund.

The Reserve Bank of India (RBI)'s monetary policy this week will be keenly watched. "We expect the market to digest the Budget announcements and shift its focus back to earnings and the forthcoming RBI policy," analysts at Motilal Oswal Financial Services said in a post-Budget report.