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Stock indices are seen trading in a narrow band in the shorter-than-usual week ahead, with some weakness likely to persist after yesterday fall, as the market would eye the industrial production data for September. Domestic stock market will remain closed on Tuesday and Wednesday for Laxmi Pujan and Diwali Balipratipada, respectively.
Global concerns and weak Jul-Sep earnings by State Bank of India and Tata Steel affected investor sentiment yesterday. The concerns over the US economy's recovery being stalled if $600-bln of spending cuts and tax hikes take effect in January rattled investor sentiment. The National Stock Exchange's 50-share Nifty ended at 5686.25, down 52.50 points or 0.9%. The BSE's 30-share Sensex closed at 18683.68, down 162.58 points or 0.9%. We believe that the underperformance in the markets in the last two sessions signifies that indices are in a consolidation phase.
From a long-term perspective, however, market participants hold a positive view and recommend accumulating stocks on dips. We believe this round of consolidation will soon come to an end and the Nifty will break-out on the upside. The fag-end of the Jul-Sep earnings season will continue to keep action stock-specific. Views are mixed on United Spirits' stock performance on Monday in reaction to the deal announcement with Diageo, with most market participants expecting profit booking in the counter after the recent rally in anticipation of the deal.
There may be stock specific action on the counters of companies detailing earnings over the weekend and next week including IVRCL, Jain Irrigation Systems, DLF, Jaiprakash Associates, and Wockhardt, among others.
