Stock Markets To Remain Subdued Due To U.S. Elections, Covid-19, Say Analysts

Stock markets are expected to remain under pressure this week due to the overhang of U.S. presidential polls and uncertainty over global growth due to resurging cases of coronavirus, according to analysts.

Uncertainty over the global growth after recent spike in coronavirus cases in the U.S. and Europe and resultant lockdowns in few European countries have weighed on investor sentiment.

Benchmark index Sensex declined by 2.63% last week following a global rout in equity markets. The broader Nifty dropped 2.41% last week.

Analysts, however, expect that better-than-expected financial results so far and improved high-frequency economic data are expected to support the market. Quarterly earnings from companies like HDFC Ltd. and Punjab National Bank and auto sales numbers this week would also steer the market, said analysts.

"Going ahead, the market is likely to remain under pressure, till the overhang of U.S. elections and the surging global cases in Europe continue. U.S. elections would dominate the global markets this week alongside Fed meeting. Apart from this, U.S. non-farm payroll data, as well as PMI data for the U.S., the U.K. and China, would be tracked by investors," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Echoing the view, Vinod Nair, Head of Research at Geojit Financial Services said that markets will remain under pressure going forward as political developments related to the U.S. election will act as an overhang amid higher volatility.

PMI data for the manufacturing and services sector are due this week, which would influence trading sentiment in the domestic market.

Ajit Mishra, VP - Research, Religare Broking Ltd said, "Markets would first react to Reliance industries numbers in early trade on Monday and then focus would again shift to global cues, thanks to the scheduled U.S. elections."

Reliance Industries Ltd on Friday reported a 15% drop in its second-quarter net profit on the weak oil business.

"Domestic markets are expected to sentimentally imitate their global counterparts this week especially since the U.S. election is a major event," said Nirali Shah, Senior Research Analyst, Samco Securities.

HDFC, Punjab National Bank, Adani Ports, Sun Pharmaceutical, Lupin, BHEL, Cipla and Union Bank of India are scheduled to release their quarterly earnings this week.

Auto companies will also be in focus this week with sales data announcement. Fed interest rate decision will also be tracked by investors.

Concerns over prospects of global economic recovery due to the resurgence of Covid-19 in various nations continue to weigh on investors' sentiments and stock markets are likely to witness volatility this week, analysts said.