Benchmark indices might go up two to three per cent this week as marketmen are expecting softer inflation numbers. The gains, however, are subject to global cues.
Tuesday’s inflation numbers are likely to prop up equities and support the bond market. Being a shortened trading week, volatility is anticipated to be high.
It would be interesting to see the quarterly results of Parsvnath Developers and Pipavav Defence & Offshore Engineering.
SEBI had banned 19 entities for manipulating the prices of the scrips and those of Tulip Telecom and Glodyne Technoserve a week ago.
A change of guard at the Finance Ministry has raised expectations of economic reform among marketmen. However, as always, actions speak louder than words.
Yield on 10-year G-Secs are likely to stay between 8.10 per cent and 8.20 per cent levels. There is hope on the Street that the RBI might be tempted to cut rates in case inflation eases. However, this is easier said than done.
The rupee could strengthen by two to three per cent against the dollar with FII inflows likely to be the major contributor.
Rising bond yields in Spain and Italy are a cause for concern in the Euro Zone. There is a likelihood of the European Central Bank (ECB) intervening through bond purchases. However, an ECB statement on the same is yet to come.
The Euro is likely to surprise the Street. It could strengthen against the $ and move towards $1.2550 levels.
Decreasing probability of a third round of quantitative easing from the US will keep 10-yr US benchmark treasury yields hard. This is expected to remain within 1.70 and 1.85 per cent levels this week on the back of good economic data from the US.
Finally, Nymex crude futures is anticipated to strengthen towards $ 97 levels to a barrel and gold towards $1700 levels to an ounce this week.