Stock markets likely to strengthen; Telecom, Eicher Motors, Axis Bank in focus

Corporate earnings and progress on President Joe Biden’s economic agenda helped sentiment after most Asian stocks closed at a record S&P 500 close on Tuesday, even as the debate over inflation risks intensified.

Equities rose in Japan and China and fluctuated in Hong Kong. Traders digest reports of a video call between Chinese Vice Premier Liu He and US Treasury Secretary Janet Yellen on economic issues.

US futures advanced with the Nasdaq 100 contracts outperforming. Tech-heavy gauges led overnight US gains amid Tesla Inc’s rally to a $1 trillion market cap. Facebook Inc. was high in trading of late on strong user growth and a pledge to buy back more than $50 billion in stock.

The 10-year US Treasury yield rose and the dollar held steady. Price pressures continue to be debated, with former Treasury Secretary Lawrence Summers saying officials are unlikely to successfully deal with the “inflationary reality” until they fully recognize it.

Back home, telecom operators including Reliance Jio, Bharti Airtel and Vodafone Idea have asked the DoT to extend the 5G trial period by six months. In May, the government allocated spectrum to telcos in the 700 MHz band, 3.3-3.6 GHz (GHz) band and 24.25-28.5 GHz band for testing for six months. A senior government official told PTI, “All telecom companies have demanded an extension of the 5G trial period by six months.

Shareholders of Eicher Motor have approved the proposal to re-appoint Siddharth Lal as the Managing Director of the company for a period of five years with effect from May 1 this year. The members also approved the proposal to increase the honorarium of Lal.

Major companies including Bajaj Finance, Kotak Mahindra Bank, Axis Bank, Ambuja Cement, Cipla, Torrent Pharma, Canara Bank, Dr Lal Pathlabs, Nippon Life India Asset Management and Central Bank of India will release their September quarter results today.

Meanwhile, a relatively solid earnings season is helping to counter concerns that rising inflation and tightening monetary policy will slow the economic recovery from the pandemic. Some 81% of S&P 500 members have reported better-than-expected earnings so far. Traders are also monitoring the rising Covid-19 cases in China and other parts of the world.

In China, Modern Land China Company became the latest manufacturer to miss a payment on dollar bonds, in another sign of tension in the country’s debt-ridden real estate sector.

Meanwhile, US Democrats are inching closer to an agreement on Biden’s multi-trillion dollar economic agenda. It could allow the House to pass a $550 billion infrastructure bill this week. Crude oil was little changed around $84 a barrel as investors weighed the outlook for US reserves and the prospects for talks that could eventually help revive an Iranian nuclear deal, leading to a jump in crude exports. There may be an increase. Gold settled above $1,800 an ounce.

(Bloomberg contributed to the story)