Market next week: Earnings eyed, but RBI holds the key

Excerpts from Closing Bell on CNBC-TV18 Watch the full show »

Frontline indices spent the session consolidating this week's stellar gains. The market showed excellent performance for the third consecutive week led by strong inflow of money, tracking positive global cues. The Sensex rose 95.27 points, to close at 16,739.01 and the Nifty went up 30.20 points, to settle at 5,048.60.

Gradual easing of funding problems in the eurozone, improvement in the economic data of United States, appreciation of rupee and October-December quarter earnings helped the market to rally nearly 8% in three weeks. Even investors started putting money into the most beaten down stocks in the last year.

Foreign institutional investors stepped into India with strong footing, taking exposure to about Rs 6,000 crore worth of equity shares since the beginning of 2012, very encouraging as compared to net sellers of Rs 3,642 crore in 2011.

ITC , JSW Steel and HCC corrected post results, while Wipro and Exide saw positive reactions.

Experts feel that most companies have announced their third quarter performance this week and now the market is looking ahead to the Reserve Bank of India’s credit policy review expected on January 24.

Radhika Gupta, Director, Forefront Capital Management adds that it has been a very exceptionally good January for the market, but it is primarily liquidity driven, a lot of midcap names, a lot of laggards have rallied.

"So, I look forward to a correction in the next week particularly if the credit policy disappoints. I don’t think most of the street is expecting a cut. That will be a surprising one. But I think you will see some consolidation or correction around 4900 and I think 5000-5050 is pretty much the peak of where we are in the short term," she adds.

However, Amit Dalal, Executive Director, Tata Investment Corporation warns that the move has been quite sharp and maybe the market will take some rest before which you see upside coming in before the budget.

Dalal is hopeful that the RBI will take a look at the CRR which is perhaps needed by most banks. Meanwhile, he is bullish on the Bajaj Auto and Hero MotoCorp in the two-wheeler space.

Nasrin Sultana

nasrin.sultana@network18online.com