Pre Market: Nervous Street readies for Q3 results, US Fed meet minutes

The undertone of Dalal Street is expected to be cautious in the few days ahead after a wobbly week, as investors anticipate the minutes of the US Federal Reserve's previous board meeting and the start of the December quarter earnings results' season.

Investors await the minutes of the Fed's December meeting, due on Thursday, for insights on the voting members' stance on the bond-buying programme, known as quantitative easing (QE).

"What we need to know is the manner of voting. If the vote on tapering was unanimous, that would indicate aggressive tapering in the year ahead. If the vote was divided, that would signal softer tapering," said U R Bhat, managing director, Dalton Capital.

A unanimous vote could have a harsh impact on the markets, causing stocks to decline, while a split vote would leave them relieved. Global markets are also looking forward to the Fed's commentary on the sustainability of robustness in the US economy and the outlook on employment data.

Indications of further strength in the US economy would continue to aid stocks of the information technology (IT) and health care sectors to do well, sources said. The $10-billion reduction in the original $85-billion QE3 starting, January 2014, is expected to weaken the rupee, helping export-oriented sector companies.

In the week ahead, oil marketing companies are likely to gain after the retail fuel price increase last week. Shares of IT firms will be in focus as the results season begin with Infosys announcing its third quarter numbers on Friday.

Expectations of a stronger result from Infosys are also likely to fuel upsides in the stock.

"The expectation is that Infosys will do well, despite the fact that the company has been sacrificing margins to gain volumes. Our belief is, if Infosys does well, then companies such as TCS, HCL Tech and Tech Mahindra will do even better," said Sonam H Udasi, head of research, IDBI Capital.

Benchmark indices declined through the week, falling about two per cent on account of lower participation by foreign institutional investors. The BSE's Sensex closed on Friday at 20,851, while the NSE's Nifty ended at 6,211.

Foreign investors were net buyers through last week at Rs 1,119 crore, including provisional figures released on Friday. Domestic institutions were net sellers through the week having sold stocks worth Rs 1,179 crore.

For the week ahead, the Nifty is expected to trade at 6,100-6,350 levels.

"Sustaining below 6,130 will be damaging in the near term because, then, the index can drift towards 5,930-6,000. Sustaining above 6,260 will bring back the bullishness in the index for the level of 6,340 on the higher side for the coming week," said Shrikant Chouhan, head, technical research, Kotak Securities.

The December services Purchasing Managers' Index (PMI) data, to be released on Monday, could also put shares under pressure. The manufacturing PMI data released last week had been lower than expected.

"People are not expecting much, as the ground reality has not improved. Demand has not picked up and sales numbers continue to be under pressure," said Gopal Agrawal, chief investment officer and head, equity, Mirae Asset Global Investments.