Stock investors are perparing for yet another sedate trading week with spurts of activities in specific sectors and stocks. Markets will closely watch minutes of the US Federal Reserve's meeting in January, which will give insights into the American central bank's rate-setting committee's thoughts about the monetary stimulus tapering. However, hardly any big announcements are expected from the interim Budget on Monday that might move the markets in a big way through the week.
Last week, benchmark indices rose one per cent, thanks to some late gains led by liquidation of bearish bets ahead of the interim Budget.
"There was some short-covering ahead of the Budget announcement to be held on Monday as foreign investors did not want to go into the Budget with major open positions in either direction. Investors were not seen building many long or short positions," said Sudip Bandyopadhyay, managing director and cheif executive officer, Destimoney Securities.
Analysts said the interim Budget was not expected to throw any negative surprises on taxation and policy-front, which the market has already factored in. However, some believe the government might announce sops for the automobile industry, particularly in the commercial vehicle segment. "That may help push automobile stocks and the broader markets as well," said Bandyopadhyay.
The Fed's release of the January Federal Open Market Committee (FOMC) meeting's minutes will be watched for hints on the central bank's expectations of the economy and its job market. "What markets will be looking for, is the commentary on the US GDP-growth guidance. As of now, the belief is, the US economy is stable enough for them to continue with the reduction in their stimulus programme. But if the growth guidance is downgraded, then there could be some concern in the market," said Tirthankar Patnaik, director, strategist and chief economist, Religare Capital Markets.
Foreign institutional investors (FIIs) ended the week as net sellers of equities at Rs 107 crore, while domestic investors were net sellers at Rs 62 crore. They have been net sellers so far this year as the Fed announced partial withdrawal of its monthly stimulus package restricting it to $65 billion of bond purchases. So far this year, FIIs have been net sellers at Rs 1,588 crore. On Friday, the Sensex closed at 20,366, up 0.9 per cent or 173 points while the Nifty ended at 6,048, a rise of 0.8 per cent or 47 points.
Analysts expect the Nifty to continue trading in the 5,900-6,200 range. "If the market reacts positively to the vote-on-account and holds the 6,040-level, then it might move up on short-covering," said Amit Gupta, head of derivatives, ICICI Direct. Gupta expects the Nifty to find support at the 5,960-levels while it could face resistance at 6,170 levels.The stock of State Bank of India, the largest lender in the country, is likely to come further under pressure after it declared a 34 per cent decline in net profits for the December-quarter. This is its fourth straight quarterly drop in net profits."Asset quality concerns continue to impact the stock. But we believe that there is not much downside left in the stock and valuations look reasonable," said Sachin Shah, fund manager, Emkay Investment Managers.
THE WEEK AHEAD
Event
Monday
* Vote-on-account
Tuesday
* ABB India results
* GlaxoSmithKline results
* GlaxoSmithKline open offer commences
Wednesday
* FOMC Meet minutes
