Budget session, pvt bank results to set tone for markets this week

Parliament’s budget session and the earnings numbers of some of the biggest private banks will keep the markets glued in the coming week. Analysts expect the positive momentum of the week before to continue, as crude oil and gold prices are likely to fall further from current levels, leading to an overall improvement in economic parameters.

“The mood will continue to remain positive, as commodity prices have been falling. This has helped the Indian economy in a big way, with the current account deficit number looking to improve. Add the fact that WPI (inflation) numbers that came out last week were good, which means that interest rate cuts can be expected,” said Sudip Bandyopadhyay, managing director, Destimoney Securities. WPI inflation, announced last Monday, slid to 5.96 per cent.

Last week, the markets had rallied on the back of falling crude oil and gold prices. Brent crude declined three per cent to $99.12/bbl. Gold fell seven per cent, down to $1,395/oz. The Sensex and Nifty gained 3.6 and 3.9 per cent, respectively, ending the week on a high note on Thursday. The markets were shut on Friday, on account of Ram Navmi.

For the coming week, the parliamentary budget session, to resume tomorrow, is being watched. However, with the opposition already expressing discontent with the Joint Parliamentary Committee report on the telecom controversy, there is fear of a held-up legislature. “In case the budget session does not resume, it will impact on the mood of the market adversely. A lot of economic bills are lined up for approval in this session,” added Bandyopadhyay.

However, experts say volatility could continue to plague the markets. “We have a truncated week, along with F&O (futures and options) expiry. Volatility, therefore, is expected to be high. Since it (last week's rally) was not a broad-based rally, the confidence to buy at current levels does not exist.

We advise profit booking at current levels. A fall below 5,600 will be the first sign to open short positions on the Index,” said Shardul Kulkarni, senior technical analyst, Angel Broking. The markets will be closed on Thursday, due to Mahavir Jayanti.

HDFC, ICICI Bank, Axis Bank and IDBI Bank will announce their results this week. Sector stocks were the main beneficiaries of last week's rally, with the Bombay Stock Exchange’s Bankex moving up 6.5 per cent.

“Private sector banks are expected to announce better growth numbers. The momentum in these stocks is not just in anticipation of good results but also the inflation and interest rate scenario,” said Taher Badshah, senior fund manager & co-head, equities, Motilal Oswal Asset Management. With inflation numbers down to 5.96 per cent, fund managers and experts are hopeful of a rate cut in the Reserve Bank’s coming monetary policy review.

Analysts said the overall outlook in the market is positive, as economic parameters in the country at this point are looking up. “The markets have not fully discounted the positive benefits that have come out of the current correction in crude oil and gold prices. Once the markets go up, participation will also go up. People may now start thinking about equities as an asset class,” said Badshah, adding that the latter are in for a further upswing in the coming months.