Nifty To Continue Its Upward Momentum

In the last week, investors turned hugely optimistic on the Indian equities which emerged as the top performing markets compared to its global peers. The mood was upbeat as the inflation eased more than expected increasing hopes of rate cut. Besides the fall in the gold and crude oil prices also bode well going ahead as it will help the government to reduce the dollar bill. In the bond markets too, the yields have fallen sharply indicating that there too, the hopes of rate cut are high. So given the stellar performance of markets in the last week, how are the markets expected to behave this week.

Well the earning season is on and that is the most important driver for the markets. Globally too, earning season is being followed by the markets in the absence of any major macro event. Earlier on Friday, UK was stripped off its AAA credit rating by Fitch to AA+. This means that the borrowing costs in the UK will rise impacting the economic recovery. The whole Euro pack is struggling to show a recovery and UKs addition will further be deteriorating to the markets.

At the domestic turf, parliament’s budget session will start from today and the success of the government getting a key bills passed will be keenly watched by the investors. A few important bills such as land acquisition bill, food security bill, Coal price pooling, FDI in Insurance etc on the cards in this session. The investors however will track the comments of the UPA allies and that of the opposition on next poll would have an impact on the market sentiment.

On the earnings front, the week also has results lined up from large private sector banks such as HDFC, ICICI Bank, Axis Bank and IDBI Bank. The hopes of the rate cut have improved the dampened sentiment on the stock. Last week Indusind Bank’s Q4 came well and hence a strong performance is also expected from these banks. The commentary of the management on asset quality, provision and margins would be keenly watched.

The week will also have F&O series expiry on Thursday which may increase the volatility.

In the USA, a new immigration bill has been tabled on which Indian IT companies have raised a few concerns. While companies like Infosys and Wipro has given tepid business guidance, a strict immigration policy may further harm the business prospects of IT companies there.

On the Asian front, the Japanese markets have started on a positive note while Chinese markets are cautious at the moment.  Ahead today we expect the market to open on a positive note.