Nifty Snaps Eight-Week Losing Streak With Brent Above $100, and Earnings Tests Loom in Mumbai and New York

India's benchmark stock indexes ended a long slide last week. The Nifty-50 gained 0.43% after eight consecutive weekly declines, and the Sensex rose 562.63 points, or 0.78%.

The catalyst came Friday, Oct. 9. Tata Consultancy Services reported better-than-expected September-quarter results, and its shares rallied more than 4%. IT stocks led the market's rebound.

The IT sector gets its next test

The recovery now depends on whether TCS's peers can match it. HCL Technologies, Wipro and Tech Mahindra report September-quarter results this week. BHEL, Canara Bank, HDB Financial Services, HDFC Asset Management Company and Nestle are also scheduled to report.

Hariselvan Radhakrishnan, founder and CEO of HST Wealth, said the sector's rebound "will depend on the performance of its peers and their outlook for the coming quarters." Guidance matters more than the quarter already banked.

There is also a Washington angle. The U.S. suspended eight IT firms, including TCS, Infosys, Wipro, Cognizant and Microsoft, from a program that allowed green card applications for foreign workers. The suspension is premised on the argument that the practice has shut Americans out of the job market.

TCS said it does not expect the action to affect its workforce strategy or customer engagements. The company said it filed single-digit applications under the program over the past two years and focuses on local hiring.

Inflation and oil

India's September consumer and wholesale price inflation figures arrive this week. Radhakrishnan called the CPI print "the first major domestic test." A stronger-than-expected number, he said, "could revive concerns over further RBI tightening," pressuring banks, automakers and real estate.

A softer reading could ease worries about where interest rates peak. He added that any relief "may prove short-lived if Brent crude remains above $100 a barrel."

Siddhartha Khemka, head of research for wealth management at Motilal Oswal Financial Services, expects Indian equities to consolidate. He pointed to Brent above $100 and sustained foreign institutional investor selling as the main weights on sentiment. Ponmudi R, CEO of Enrich Money, said tensions involving Iran and the Strait of Hormuz continue to threaten global energy supplies.

US inflation and retail sales data will also move Treasury yields and the dollar, Radhakrishnan said. Rupee movements are on the watch list too.

Wall Street's turn

The same forces are at work in the United States. JPMorgan Chase and the other big banks open third-quarter earnings season this week.

The S&P 500 closed Friday at 7,811.54, just off a record high. FactSet's Friday report shows analysts expect S&P 500 earnings growth of 29.6% for the quarter. That would be the third straight quarter above 25%. These are estimates, not results.

Sheraz Mian, director of research at Zacks, called the upbeat earnings outlook "absolutely essential" to supporting the market. "Interest rates are big headwind, and offsetting that is the extremely positive earnings outlook," he said.

Ken Mahoney, CEO of Mahoney Asset Management, put the dependence more bluntly. Third-quarter results from tech and large companies are crucial to "holding up what otherwise is a reeling market in most other sectors at the moment." He added that "high oil prices and yields ripping puts valuations under pressure, so that earnings growth is key."

The pressures are layered. Government bond yields have risen sharply on deficit and economy worries, and the AI borrowing spree has helped push them higher. The Iran war continues to keep oil and gas prices elevated.

The price pain is already showing up in a client newsletter from Boyce Wealth dated Oct. 1. It cites producer prices up 5.4% year over year, consumer prices up 3.4%, core consumer prices up 2.4% and diesel near $6.40 a gallon. The firm noted that fuel can be 15% to 30% of the cost structure for some perishable foods.

What to watch

Both markets are leaning on earnings to offset energy and rate pressure. Both are also at the mercy of a Brent price above $100 that profit growth cannot change.

The next data points are concrete. HCL Technologies, Wipro and Tech Mahindra will show whether TCS's results and guidance were a sector-wide signal or a one-company bounce. JPMorgan's report will give the first read on whether U.S. results can match the 29.6% growth estimate.