After six consecutive weeks of gains, the Indian market may have to go through volatility during the week, on the back of concerns surrounding the Greece bailout package.
Uncertainty over negotiations on the much-awaited debt deal had seen investors take money off risky assets, resulting in a fall in equities, commodities and the euro at the end of last week. The S&P 500 saw a 0.7 per cent fall on Friday, its biggest percentage decline so far in 2012.
India's benchmark stock indices, the Sensex and Nifty, also fell but managed a sixth straight week’s gain. The broadbased Nifty had declined 0.6 per cent to 5,381.6 on Friday due to weak global cues and disappointing industrial production data for the month of December.
Whether Friday's fall is temporary and the market continues upward will depend largely on what happens on the Greek bailout. The euro zone finance ministers' are scheduled to meet on Wednesday and this will be keenly watched by market players.
| KEY EVENTS TO WATCH THIS WEEK |
| * State Bank of India Q3 results on Feb 13 |
| * WPI Inflation for Jan 2012 on Feb 14 |
| * Euro zone ministers’ meet on Feb 15 |
| * Other important Q3 results, including Tata Motors, Coal India, Reliance Infra |
| * US economic data, including retail sales, during the week |
Experts say after the sharp rally, the market could undergo consolidation. "Shares are vulnerable to a short-term pullback after strong gains so far this year, and this may now be occurring on the back of the latest Greek worries,” said Shane Oliver, the Sydney- based head of investment strategy at AMP Capital Investors, in a note.
"The rally is too fast, too soon. Negatives are being discounted, while positives are latched on,” said Ajay Bodke, head–investment strategy and advisory, Prabhudas Lilladher. “The market needs to digest the gains. It should consolidate at current levels.” .
Thanks to close to $4 billion of foreign inflows into Indian equities, the benchmark Nifty has managed to post a 16.4 per cent gain so far in this calendar year. Domestically, the inflation numbers for January 2012, to be announced on Tuesday, will be keenly observed, as it could set the tone for central bank's future rate action.
According to a Reuters poll, wholesale price inflation is expected to cool further to 6.6 per cent year-on-year in January from 7.47 per cent in December.
Market participants will also keep an eye on the quarterly results’ announcements from some of the top companies during the week. Among the index components, State Bank of India, Tata Motors, Coal India and Reliance Infrastructure will announce their numbers.
According to Shrikant Chouhan, head- technical research, Kotak Securities, the Nifty has strong support at 5,330 levels and faces stiff resistance at 5,470 levels. “Sustaining above 5,470 will very likely lead to higher levels in the markets of 5,650. On the lower side, a breach of 5,280 will be viewed negatively for lower level targets of 5,150 and 5,050,” he said.
