Apr 30, 2012, 08.39 AM IST | Source: Moneycontrol.com

What will drive stock market sentiment next week?

Newsflow from the Eurozone, more than third quarter corporate earnings, is likely to influence stock prices the week starting April 30. There will be one trading session less as the market will be closed on May 1 for Labour Day/Maharashtra Day.

Santosh Nair
Moneycontrol.com

Newsflow from the Eurozone, more than third quarter corporate earnings, is likely to influence stock prices the week starting April 30. There will be one trading session less as the market will be closed on May 1 for Labour Day/Maharashtra Day.

Indian equity benchmarks have managed to hold out within a narrow band, even as they are being roiled by a steady flow of bad news, much of it emanating from the domestic economy. However, trading volumes have been shrinking, and this is leading to concerns that volatility could rise. Traded turnover in the derivatives segment on expiry day (April 27) was Rs 1.90 lakh crore, the lowest since the December expiry when the turnover was less than Rs 1.80 lakh crore. Despite low volumes, the market managed to withstand the pressure from rating agency Standard & Poor's move to lower their outlook on India's long term ratings to negative from stable.

In the Eurozone markets, traders will be speculating on the election results in France and Greece and their possible implications for the bail-out plans for the troubled member nations. Indications so far are that the poll outcomes in both countries will spell trouble for the Eurozone rescue plan, the ripples of which will be felt in financial markets across globe.

The European Central Bank will meet on May 3 to review interest rates, an event being closely eyed by investors. In key data, China’s official Purchasing Managers Index (manufacturing) will be of interest to investors.

Back home, banking and fast moving consumer goods shares could be in the limelight as key companies announce their March quarter numbers.

Dabur, Godrej Consumer, Hindustan Unilever and Marico's numbers will help investors make up their mind on the consumption story. FMCG shares have had a good run over the last few quarters, in part due to strong growth numbers and partly on defensive buying by investors seeking to escape the downtrend in the broader market. However, this has led to FMCG stocks getting expensive, and many analysts questioning the valuations. In the banking space, Bank of Baroda, Corporation Bank, Vijaya Bank, Bank of India and Oriental Bank of Commerce will be reporting during the week. Most private sector banks have reported good numbers for the March quarter, but that may not be the case with state-owned banks which have a sizeable exposure to most of the troubled sectors of the economy. Banking stocks have been subdued over the last six months on concerns that the asset quality of banks were likely to deteriorate steadily unless the economy recovers.

Other key earnings closely watched by the market include those of two-wheeler major Hero Motocorp and telecom services giant Bharti Airtel.

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