Indian stock markets are likely to be guided more by fourth quarter earnings of India Inc. than by the outcome of the French presidential polls, the second round of which will be held on Sunday, May 7. Leading opinion polls is independent candidate Emmanuel Macron, perceived as "market-friendly" and trailing him is far-right candidate Marine Le Pen (Front National).
"Going ahead, the remaining quarterly results will be watched carefully to confirm expectations of growth returning back to the economy. Phase II of the French elections on Sunday will also be watched closely though, it may not have any major impact on markets next week," Dipen Shah, Sr. vice president - PCG Research at Kotak Securities Limited, said in a note on Saturday.
The BSE Sensex saw some bullish trend during the four-day week but ended with losses on Friday, to close at 29,859, down 267 points while the NSE Nifty ended 75 points lower at 9,285.
On Friday, May 5, FIIs were net sellers of Indian equities worth Rs 364 crore, according to provisional data published by the National Stock Exchange (NSE). On May 4, 3 and 2 also, they were net sellers of Indian stocks worth Rs 601 crore, Rs 518 crore and Rs 612 crore, respectively.
Despite markets closing in the red, select stocks inched close to their all-time high on Friday. These included Cadila Healthcare, UltraTech Cement, Kotak Mahindra Bank, Indiabulls Housing Finance, Voltas, HDFC Bank, Yes Bank, CESC, MRF, BPCL, GAIL (India) and Apollo Tyres.
Second round of French presidential polls
The Sunday face-off will seal the fate of 39-year-old Macron and 48-year-old Le Pen when voting begins at 8 am (local time) and ends at 7 pm, though it will be extended by an hour in some large cities. The two candidates represent distinct ideologies and outlook.
"He (Macron) is a centrist, pro-European Union and pro-globalization, while she is a far-right politician who is anti-EU, anti–immigration and is calling for protectionist measures to defend French companies and jobs against foreign competition. If Macron does win, it could mark the end of the populist bandwagon that rolled out last year with the election of President Trump in the U.S. and the vote for Brexit in the U.K," marketplace.org said in an analysis ahead of the Sunday polls.
The new French president will assume office on May 14.
SpiceJet, Jet Airways, Interglobe Aviation gain sharply in three months
Aviation stocks gained substantially on the last trading day (Friday) of the week, on the back of falling crude oil prices, in addition to another positive trigger: steady gains in the rupee vs the US dollar. Aviation fuel accounts for about 30-35 percent of operating costs for airlines in India.
SpiceJet has gained 85 percent in the past three months (from Rs 64.35 on February 6 to Rs 117.50 on May 5) while Jet Airways has rallied 41.75 percent during the same period (from Rs 376 to Rs 533).
Interglobe Aviation, which owns IndiGO (India's largest in terms of passengers carried), has appreciated 30 percent (from Rs 858 to Rs 1,116).
In comparison, the BSE Sensex gained 4.98 percent in the past three months, based on its February 6 closing of 28,439.
Coinciding with falling crude oil prices, the fast-appreciating rupee also augurs well for aviation companies, since it leads to a fall in the landed price of aviation fuel in India. The rupee had appreciated 5.84 percent as of April 29 when compared to its January 1 exchange rate of 68.23 to the US dollar.
