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Key stock indices are seen taking cues from overseas markets and companies' Oct-Dec earnings next week, adding inflation data for December will be keenly eyed on Monday. India's headline inflation rate, based on the Wholesale Price Index, is likely to remain unchanged from last month at 7.2% in December. The inflation figure is important for investors in the run-up to the Reserve Bank of India's monetary policy review, due on Jan 29. However, there are talks that this data may disappoint, thereby hurting chances of a rate cut from the country's central bank this month. We expect inflation to inch up in Dec '12 and past two months inflation data to be revised upwards. If the Infosys result yesterday is any indication, 4QCY12 (Oct-Dec) earnings might surprise on the upside. These factors might inhibit RBI from effecting a policy rate cut this time around.
Core inflation is the number that should be keenly eyed in the data for December. In November, the non-food manufactured products inflation, which is a proxy for core inflation, fell to a 32-month low of 4.5% from 5.2% a month ago. Those expecting core inflation to ease in December maintain their view that the RBI would cut the Repo Rate by 25 basis points on Jan 29. However, scepticism in the market regarding the same may keep bank shares under pressure, and in turn the National Stock Exchange's 50-share Nifty given that the sector has an over 21% weightage in the index. Yesterday, the NSE Nifty ended at 5951.30 points, down 17.35 points, or 0.3% from Thursday. The BSE's 30-share Sensex closed flat at 19663.64, up 0.09 points. Traders believe the Nifty has immediate support at 5920, slipping below which it can slide down further to 5880.
Oil and gas stocks may remain in focus on hopes of a quick decision on raising diesel prices. Yesterday, Minister of Petroleum and Natural Gas Veerappa Moily said a decision on revising prices of petroleum products like diesel and cooking gas was expected soon but declined to put any timeframe on the exercise. Information technology stocks may also remain buoyant after Infosys' better-than-expected Oct-Dec earnings and marginally higher revenue guidance for 2012-13 (Apr-Mar). After Infosys, investors will keenly eye numbers from Tata Consultancy Services, due on Monday. Seasonal weakness, foreign exchange losses, and lower growth in business volumes may lead TCS to post a 3% sequential decline in its net profit at 34.10 bln rupees.
Apart from TCS, NIIT Technologies, HCL Technologies, and Wipro will also detail their earnings next week. Jaiprakash Power Ventures and Petronet LNG will detail their Oct-Dec results over this weekend. Muthoot Finance, Axis Bank, Bajaj Finance, Development Credit Bank, Bajaj Auto, YES Bank, Hero MotoCorp, HDFC Bank, ITC, MindTree, Reliance Industries, and UltraTech Cement will post numbers next week.
