"Next batch of Q1 June 2016 corporate results, progress of monsoon rains, sentiments in global markets, will set the market trend in the coming week.. Investors will continue to watch the developments on the Goods and Services Tax (GST) constitutional amendment bill in Parliament. The much awaited GST bill for consideration and passage is in Rajya Sabha's agenda for the next week. The government is keen to get the GST Bill approved during the current Monsoon Session of Parliament.
Also, auto stocks and state-owned oil marketing stocks will remain in the focus in the coming week. Auto companies will be start unveiling monthly sales volume data for June 2016 and state-owned oil marketing companies will be in focus as a fuel price review is due at the end of the month. On macro economic data front, Markit Economics will announce the India Manufacturing PMI and Nikkei India Services PMI next week.
Meanwhile, the next batch of companies scheduled to announce their Q1 June 2016 earnings include HCL Infosystems, Hotel LeelaVenture, InterGlobe Aviation, Piramal Enterprises, Tata Communications and Tech Mahindra, Indian Bank, Voltas, Bata India, Berger Paints India, Cadila Healthcare, Tata Power, GlaxoSmithkline Consumer Healthcare and Pfizer. Clearly valuations have become an issue we need to worry about as that leaves little room for further upside if corporate earnings disappoint. We believe stocks are not going to go up fast from here as earnings are not coming along and valuations are stretched. Nifty one year forward price-earning multiple of 16-17 times is expensive relative to the long term average and the market could correct 12-15 percent if the Nifty PE multiple were to revert to its mean.
Indian equities capped their biggest monthly climb since May 2016 and we would argue that this is not because the world has rediscovered India's growth but it is just that there is a very strong wave of money coming into the emerging markets. Foreign funds extended their purchases in the Indian market and optimism that the GST Bill, the nation's biggest economic reform in decades, will be passed by Parliament soon".