Ignoring the flare-up in crude oil prices to a fresh four-year high amid escalating tension in the Arab world following US President Donald Trump’s threat to mount a missile attack on Syria, the domestic equity bellwethers of Bombay Stock Exchange and National Stock Exchange continued to accumulate steady gains after analysts predicted better earnings by India’s corporate sector in January-March 2018, the last quarter of FY 2017-18.

Infosys Technologies will declare its numbers to start a fresh season on Friday. Not only the Infy share but NSE’s Nifty IT index jumped more than 3 per cent intra-day on Thursday. Analysts say a weakened rupee has potential to improve IT companies’ dollar revenue and profits.

Dalal Street participants also expect improved macros such as IIP or Index of Industrial Production for February and further easing of consumer price index-linked inflation which, according to a survey by Bloomberg, may decline to 4.2 per cent for March from 4.44 per cent in February which market watchers say should be line with Reserve Bank of India’s latest projections declared on 5 April.

However, IIP, according to American business news agency, may moderate to 7 per cent from 7.5 per cent in January. Sheer optimism took the 30-scrip Sensitive Index of BSE above the 34,000 mark as it ended the day with 0.47 per cent gain at 34,101.13 (+160.69) points.

The 50-share Nifty of NSE inched towards 10,500 mark to end 10,458.65 (+41.50) points up 0.40 per cent. In Sensex 18 shares advanced and 13 declined. For Nifty the ratio was 23:27.

The banking segment witnessed a mix of buying as well as selling.
A few private lenders such as ICICI Bank and Axis Bank moved up on value buying and short covering while state run bank shares lost ground.

The volatility in the banking segment led analysts to maintain that the financial sector —mainly banks—may have overall negative impact on Q4 earnings season and thereby on benchmark indices.

US-based S&P Global Rating’s report says, “As a number of banks in India confront serious governance and risk issues , the tone at the top is crucial. Leadership groups in Indian banks need to ensure that they enhance the risk culture reputation and financial strength of bank. ”

S&P Global Ratings assesses managements’ ability and expertise to grow the business sustainably while rating banks. ” We view governance and transparency in Indian banking as a negative factor,” says A&P analyst Michael Puli. The comment came in the wake of leadership crisis haunting Axis Bank and ICICI Bank. It has BBB ratings for both these private lenders with “stable” outlook.

Ahead of the Q4 earnings, Deutsche Bank of Germany says corporate India is likely to show strong numbers but the banking sector weighs on projections with its continuing struggle to clear the NPAs “Q4 profits for NSE Nifty 50 Index companies will grow 10 per cent from a year earlier.

By excluding financials the increase should be a healthy 20 per cent,” according to analysts Abhay Laijawala and Bejoy Kumar. Higher provisioning by banks may result in 34 per cent decline in lenders’ earnings since they have the daunting task of clearing $ 210 billion burden of stressed assets. Lenders look more vulnerable after RBI has decided to tighten the norms for the resolution of bad debts.

Earnings have recovered steadily over the past two quarters as businesses rebound from the disruption caused by demonetisation of 8 November 2016 and roll out of Goods and Services Tax on 1 July 2017. Investors hope the pick-up in earnings will cushion India’s market from external risks including potential threat of trade war between the US and China.

Meanwhile,shares of oil marketing companies or OMCs such as IOC, BPCL and HPCL declined further on crude price hike and the government’s diktat asking them to absorb the burden of increase in petrol and diesel prices @ Rs 1 per litre.

These shares lost more than 10 per cent this week.The import bill of the country that imports 80 per cent of its fuel requirement is likely to increase sharply, say analysts. Besides, fuel prices have always added to the consumer price index linked inflation, they point out.

Nifty Bank and Nifty PSU Bank of NSE closed 25,105.10 (-31.70) points and 2,955.35 (-109.45) points down 0.13 per cent and 3.57 per cent respectively.

Gainers in BSE benchmark included TCS Rs 3,131.05, 3.83 per cent; Infy Rs 1,165.80, 3.13 per cent; Axis Bank Rs 546.04, 1.21 per cent; and Tata Motors Rs 358.50, 0.90 per cent. SBI was down 1.24 per cent to close at Rs 254.10.