The results season has started with a bang. The early results have been blockbusters. Several blue-chip companies have done extremely well. Even beating expectations exceeding their historic bests, or touching higher metrics on multiple parameters for a quarter.

Interestingly, with the exception of a few companies, most of these blockbuster results got sold into. This indicates that the markets may have already factored in these spectacular numbers. With the Sensex touching 50K, these expectations may well have been priced in.

So, why is the market selling down even in the commodity companies where these spectacular numbers are probably not priced in? In these cases, the market may be pricing in the fact that these numbers are not sustainable. So, the stock prices are unwilling to factor in performance even though there is a limited sign of bad news yet. The markets expect that the bad news will come and don’t want to become overly optimistic about these companies.

Overall, the markets are slowly preparing to receive the budget. The results season may not excite markets too much in the interim. The market has limited expectations from the budget. It may only turn cautiously pessimistic in the run-up week to the budget. The game will now shift to the budget and sentiment will turn the key driver as the budget nears. For now, the earnings season will probably take a pause in driving the markets.

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