Crude prices, IIP expectations, global risk aversion, market expectation on General Anti-avoidance Rules and inflation will impact equity market movements this week.
The Nifty and Sensex could shed as much as three to four per cent this week. Behaviour of revenue and profit of companies such as HDFC, PNB, Glaxo, Hindalco, Asian Paints, SKS Micro and Jubiliant Foodworks, will set the street's expectation for this year. Trading on 10-year benchmark G-Sec is in the shut period due to a changeover to a new benchmark in mid-May. Yields on 13-year (which will now become 12-year) are expected to soften 10-15 basis points this week.
The Street is expecting weak IIP data and a non-food manufacturing inflation rate of less than five per cent this week. Also expected is a mid-week Government clarification on GAAR related to FII taxation.
The rupee dollar could touch Rs 54.5 to a dollar because any crude softening will see huge buying by oil companies putting pressure on the rupee.
But softening global crude prices have rekindled rate cut expectations on the premise that the actual crude price for this year could turn out to be lower than the budgeted $115 to a barrel.
Nymex crude prices are expected to find support at $ 97 to a barrel. Data from the US has been weak but not so weak to warrant a QE3 liquidity injection. US 10-yr treasury will be range bound between 1.85 and 2 per cent levels in the absence of any fresh Euro zone concerns.
Movement in the Euro dollar exchange rate will be contingent on election results in France and Greece.
Though currency traders have discounted a weak Euro it may surprise by touching $ 1.3315 levels to a Euro on the upside. However it will very challenging for the European Central Bank to sustain its money pumping exercise into the Euro zone.
IMF's assessment of Spain's financial sector in end April 2012 observed that Spain needed to deepen its financial sector reform strategy and build strong capital buffers.
IMF also said that large banks in Spain appeared sufficiently capitalised and had strong profitability to withstand deteriorating economic conditions. But other banks which relied on state support for funding were vulnerable to disruptions in funding markets, IMF added.
Finally international gold prices are expected to remain flat this week though slightly on the positive side over last week's US$ 1645.20 to an ounce.