Key stock indices are expected to extend gains this week as the National Stock Exchange's 50-share Nifty closed above its crucial resistance zone of 5350 saturday. Last saturday, the NSE's 50-share Nifty ended at 5358.70, up 16.60 points or 0.31% from Friday. Gains were supported by positive cues from the US markets, which ended up after weak August jobs data raised hopes of quantitative easing by the Federal Reserve at its next meet Thursday. Traders will take cues from overseas markets this week, with eyes on US non-farm payrolls data for August. The data is eyed keenly as it will give clues on whether US Federal Reserve will look at another stimulus programme at its two-day policy meet this week. So long as the economy is continuing to make even modest progress, it would be better in our view, to hold further QE (quantitative easing) in reserve in case it is needed to deal with a major negative shock in the quarters ahead.The investment firm believes the US Federal Reserve will stick to just verbal indications that it is willing to take measures to support the economy.
Back home, eyes will be on India's industrial production growth in July, data for which will be released on Wednesday. Metal stocks may extend gains on short covering. Positive on Tata Steel, Sterlite Industries India, and Jindal Steel & Power. We believes the stock is likely to rise as government approvals will result in reserve upgrades, rise in production, and higher gas prices. A combination of this growth, benign consensus expectations, below average valuations, and buyback support makes us believe that the under-weight trade on Reliance (Industries) is over. On the other hand, stocks of state-owned oil marketing companies Bharat Petroleum Corp, Hindustan Petroleum Corp, and Indian Oil Corp may remain subdued as the government dashed hopes of a fuel price hike over the weekend saying there was no plan to do so immediately.
