The street is expecting lacklustre third quarter results from India Inc for the fiscal 2012. Look forward to a revenue slowdown and significant erosion in operating margins when companies announce third quarter results. Having already discounted such a corporate performance, marketmen are now focusing on what companies would do, to combat the hostile economic environment.
IndusInd Bank, Infosys, HDFC, Development Credit Bank and Sintex Industries to name a few would be the first ones to declare third quarter results this week.
Expect a hardening of 10-year G-Sec yields from last week's close of 8.22 to around 8.35-8.40 range. This is due the fact that RBI may temporarily stop open market operations as the signalling rate (cost of funds) is 8.5 per cent. Hence the 10-year yields can not sustain last week's levels and a correction is in the offing.
Industrial Production data (IIP) for November 2011, expected on January 12 would have an impact on equity market direction.
Analysts expect the Nifty and the Sensex to vacillate between two and three per cent but mostly on the downside of last week's close.
The likelihood of a rate cut by RBI is diminishing due to rising crude prices.
The US Iran face-off could take the Nymex crude futures up to $ 103 to a barrel this week, on a worst case scenario basis.
Though analysts expect the rupee to appreciate against the dollar and touch 52.45 levels, any pressure on crude could reverse this expectation.
Corporates have no choice but to wait for the outcome of assembly elections in Uttar Pradesh as it will decide the direction of Centre's policy making.
Global cues
On the global front, Euro Zone remains a pain point, though few anticipate a breakup of the monetary union. Expect a few more sovereign downgrades due to increasing debt to GDP ratios and this has ensured spiralling of benchmark bond yields.
It remains to be seen whether Italy and Spain are successful in raising money by refinancing their existing debt that runs into billions of Euro.
Hence one Euro is expected to remain sideways on the time series charts in the range between $1.2700 and $1.2750. But a section of analysts believe that the Euro could pull back to $1.2890 levels.
Better economic data from the dollar last week is expected to send US 10-year treasury yields above two per cent and in the 2.1 to 2.15 per cent range.
In the absence of any safe haven phenomenon, expect gold to soften in excess of five cent this week.
There are a slew of economic data expected across the globe this week. Prominent among them are new yuan loans from China (forecast at 560 billion yuan) and German GDP growth (forecast at three per cent) on January 11.
On January 12, markets are expecting the rate decisions from Bank of England and the European Central Bank to stay put at 0.5 per cent and one per cent respectively.
Retail sales data from the US for December is also expected to grow at the same rate of 0.2 per cent that was logged in November.
Finally, the University of Michigan's consumer confidence survey from the US for January is optimistic and is forecast at 70.5 as against the previous 69.9.