Week ahead: Market most likely to track global cues

Thanks to fairly heavy buying by foreign institutional investors and a fair amount of short-covering ahead of November series derivatives expiry guided the market to a positive close last week. The market witnessed a few rounds of profit taking during the middle of the week, but solid gains recorded on the first two sessions and the sharp rally on Friday enabled it to sign off on a firm note.

Weekly Review: Sensex nudges past 17,000-mark

While a spate of new orders buoyed up information technology stocks, hopes of consolidation among state run banks livened up the banking sector last week. By and large, expectations that the government would push forward reforms in banking and insurance sectors and would speed up the divestment process kept the mood fairly bullish for most part of the week. The government said on Thursday that it proposes to sell a 20% stake in steel major SAIL. The remarks from the deputy chairman of the planning commission that the government may not curb inflow of overseas funds too contributed to the positive mood.

Most Read

Business Games | Business Quiz Images: Ratan's tata In Pics: Volkswagen Beetle to cost Rs 20 lakh Images: Treat your smartphone like a computer In Pics: This car runs at 563 kmph! Images: Amazing Hyundai cars In Pics: 'Tower of Dubai' ready to stun the world Images: Six Indian women make it to Forbes' list Follow us on Twitter

The market is likely to track global cues for direction for a better part of the coming week. And then, there will be triggers, both positive and negative, aplenty from the home front as well.

Among the important events to look for will be the debate in parliament on key issues. As many as three important issues will be discussed during the course of the week, namely, the proposal to raise foreign investment in the insurance sector, reduction of government's holding in state-run banks and vesting statutory powers to the pension regulator.

Tata Steel and Tata Motors will be releasing their consolidated results during the course of next week and their report cards are certain to make a significant impact on price movements during the week.

November series derivatives contracts will expire on Thursday, the 26th November 2009. In the event of the market seeing a sharp correction during the earlier part of the week, expect some hectic short-covering in the next phase.

If the survey report of economists is any indication, the country's GDP growth is likely to see a slowdown in the second half of this fiscal. However, according to a research report, the business confidence has improved significantly. The NCAER - MasterCard Worldwide Index of Business Confidence rose 21%, with a rating of 143.7 points in October 2009, compared with 118.6 points in July 2009. In April 2009, BCI ratings were at their lowest, at 81.6 points, following a global financial crisis that hit world economies.

Central banks and governments across the globe are likely to keep stimulus measures in place for some more time as the pace of recovery in most parts is still slow. Any talks of central banks considering some tightening measures may result in some strong rounds of selling across several markets.

However, the slide if any, will not be a sustained one as investors are likely to step in at lower levels.

The mood is likely to remain fairly positive in the coming week. The Apex bank's decision to give banks another two quarters time to set aside more funds out of their profits to cover non-performing assets is expected to result in a rush for bank stocks. The central bank had earlier given banks time till September 2010 to increase this provisioning. Now, the banks will have to comply with this requirement by end-March 2011.

Realty stocks, which were at the receiving end for most part of last week, may see a rebound of sorts. Pharma stocks are likely to see some buying.

Infrastructure, sugar and cement stocks are likely to attract buyers at lower levels. It will be a tough ride for midcap and smallcap stocks.

SEARCH