Trump effect, Q3 earnings to drive markets this week

New Delhi: Investors will keenly watch the developments in the US as policies under President Donald Trump are likely to drive domestic market sentiments in this truncated trading week along with corporate earnings and budget expectations, feel experts.

Domestic bourses would remain closed on Thursday for Republic Day.

"One needs to closely watch the detailed fleshing out of Trump's policies over the next few days to gauge the exact impact," said Ajay Bodke, CEO and Chief Portfolio Manager: PMS, Prabhudas Lilladher. 

Trump on Saturday assumed office as the US President and reiterated his pledge to restore jobs to Americans and protect borders, a veiled reference to pursuing a tough immigration policy. He also said that protection will lead to great prosperity and strength.

"This week, the focus would be on Trump's policies, corporate earnings and upcoming budget," said Sanjeev Zarbade, Vice President PCG Research, Kotak Securities.

Market participants would track the new policy initiatives of the newly-elected US President.

"This week it will be imperative to watch after-effects of Trump's statements in oath ceremony, while earnings of heavyweights like, HUL, HDFC, Bharti Airtel and Ultratech will further set the tone ahead of Union Budget," said Mustafa Nadeem, CEO, Epic Research.

"Since this week is having F&O expiry so volatility is very much expected on the card. Additionally, most discussed Union budget is approaching fast which is likely to put its impact on the street," said Abnish Kumar Sudhanshu, Director & Research Head, Amrapali Aadya Trading & Investments.

Meanwhile, stock market may also react to news thatregulator Sebi is planning to further tighten the regulations governing participatory notes amid persisting concerns that this route is being used for illicit fund flows.

Participatory Notes (P-Notes) are instruments issued by registered foreign portfolio investors (FPIs) to overseas entities who want to participate in the Indian market without being directly registered.

"The rally is expected to take rest for a while, probably waiting for the budget to show the next course of action," said Jimeet Modi, CEO, SAMCO Securities.

Over the past week, both key indices recorded fall of 203.56 points, or 0.74 per cent, and 51 points, or 0.60 per cent, respectively.

"Ahead of derivatives expiry, global clues, Q3 FY17 earning and budget expectation will dominate market sentiments this week," said Vijay Singhania, Founder-Director, Trade Smart Online.