RBI policy, earnings, global market eyed next week
The Reserve Bank of India's monetary policy, Oct-Dec corporate earnings, January
automobile sales numbers, and the movement of crude oil and global equities will set
the trend for equities next week. Consensus shows the Indian central bank is likely to
keep interest rates unchanged at its sixth bi-monthly monetary policy on Tuesday in
the backdrop of recent volatility in financial markets, and the impending Union
Budget for 2016-17 (Apr-Mar). In the absence of uncertainty over interest rates,
market participants will closely monitor the RBI's stance. They expect interest rates to
remain accommodative and data-dependent.
While the tone is likely to be dovish, the RBI, in our view, will also take a moment to
remind markets of its medium-term 4% CPI (consumer price index) target, suggesting
any additional space that does open up will be measured. Through the week, cues
from global markets and the movement of crude oil prices will also be eyed as the
sustainability of gains in global equities will also depend on whether the rebound in
crude oil prices is backed by a follow-up buying. Russia's meeting with the
Organization of the Petroleum Exporting Countries will also be in focus, as crude oil
prices are expected to further gain if major oil producers agree to cut production, to
overcome the glut of crude oil.
On the Intercontinental Exchange Europe, the West Texas Intermediate March crude
oil futures were trading at $33.67 a barrel, up over 1% from the previous close.
Yesterday, indices ended nearly 2% higher each, aided by firm cues from global
markets. Nifty 50 ended the session at 7563.55, up 138.90 points or 1.9% from the
previous close, intraday testing a low of 7402.80 points, and high of 7575.65 points.
Sensex ended at 24870.69, up 401.12 points or 1.6%, intraday moving between
24340.06 and 24911.90 points. The February futures of Nifty 50 ended at 7568.05, at
a premium of only 4.5 points to the spot index, and open interest in the contract rose
2.9% to 19.37 mln.
Tracking the gains in the broader market, the India VIX or volatility index fell 3.7%
to 17.2400. Today, foreign portfolio investors were net buyers of shares, stock and
index futures worth 24.40 bln rupees, data showed. Domestic institutional investors
bought shares worth 2.40 bln rupees.
Next week, Nifty 50 constituents which will announce earnings include Tata Power
Co, Tata Steel, Lupin, Bajaj Auto, Bosch, and Tech Mahindra. On Monday, shares of
Larsen & Toubro will be in focus, and are expected to fall as the engineering major,
post market hours today, cut its order inflow guidance for 2015-16 to flat from 5-7%
earlier. Companies in the automobile space will be in focus as they will announce
their sales numbers for January. The performance of the segment is expected to be
mixed, with four-wheelers and commercial vehicles likely to show growth year on
year, while two-wheelers and tractor sales may remain muted.
( www.rupeedesk.in )
