Oil prices, Q4 earnings to drive stocks markets this week

Earnings from bluechips such as SBI and Cipla, and movement of crude oil and its impact on inflation and trade deficit will set the tone for stock markets this week, say analysts.

Political developments in Karnataka, which saw fall of the three-day-old BJP government on Saturday minutes before the scheduled trust vote, could have a short-term bearing on stocks, they added.

The impact of the Karnataka political outcome will be short-lived. This is not likely to impact the prospects of NDA in the general elections of 2019. From now on, till elections to Madhya Pradesh, Rajasthan and Chhattisgarh later this year, economics will dictate the direction of the market than politics, said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

He said immediate concern to the market will be the impact of crude at $80 on inflation, interest rate, exchange rate and GDP growth rate.

With the macros turning unfavourable with the crude spike, the upside to the market is capped. If crude continues to rise and cross $85 there will be a sell-off in the market.

Otherwise the market will be range-bound, Vijayakumar added.

Rising crude, bond yields and dollar have been the worries of market from quite some time in terms of its impact on fiscal deficit, inflation and RBI policy. Further up move in crude prices or rising yields is likely to be negative for markets, said Teena Virmani, Vice President Research, Kotak Securities Ltd.

According to another market expert, investors will be keeping an eye on this week's Federal Open Market Committee (FOMC) minutes and the US jobs data to get some cues on interest rate hike trajectory.

Stock specific action may be seen in view of corporate results scheduled for this week, he said.

Among major earnings this week are from Cipla, Dr Reddy, SBI, Jet Airways, Tata Motors and Gail.

The benchmark BSE Sensex lost 687.49 points, or 1.93 per cent, to close at 34,848.30 on Friday.