Weekly Outlook for Indian Market & Sectorwise Stocks for the Week - 25.Jan.2016 to 29.Jan.2016

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Indian Markets Outlook for the week – 25.Jan.2016 to 29.Jan.2016 ((Gains seen capped; earnings, global cues eyed))


The relief rally witnessed in equities yesterday may continue next week provided the
recovery in crude oil prices and global markets sustain. Next week, investors globally
will be eyeing monetary policy decisions of US Federal Reserve and Bank of Japan.
The focus will be more on the commentary of US Fed, particularly after the sharp fall
in crude oil prices. The Fed will hold its two-day meeting on Jan 26-27 and Bank of
Japan on Jan 28-29.

Back home, next week, which a truncated one, will mark the expiry of the January
futures contract and therefore, volatility is set to be high. Indian markets are closed on
Tuesday for Republic Day. Moreover, several companies are scheduled to report
earnings next week, which will also keep action largely stock-specific. After ending
with over 20% losses from their recent highs on Thursday, benchmark indices
recovered smartly yesterday and ended 2% higher as crude oil prices rebounded from
their 12-year lows. Besides, comments from European Central Bank chief Mario
Draghi on Thursday led to prospects of more stimuli from the central bank,
comforting investors.

Yesterday the National Stock Exchange's Nifty 50 ended above the 7400-mark at
7422.45, up 145.65 points or 2.0%, and S&P BSE's Sensex closed at 24435.66, up
473.45 points or 2.0% from close Thursday. We think it (the recovery in the market)
will be more of a short-lived phenomenon. But we believe long-term investors should
use the sharp correction in stocks to accumulate. That the recovery in the market was
purely on the back of covering of short positions was clear from the futures data, as
the January futures contract of Nifty 50 saw an over 5% fall in open interest. But there
are some optimists in the market who believe Indian equities are done seeing major
sell-off and are set for a bounce back. A recovery was certainly due in the market and
it looks like we should see this pullback sustaining.

Earnings Watch

Besides eyeing global developments, the market will continue to focus on corporate
earnings. Nifty 50 companies detailing their Oct-Dec earnings next week include
Bharti Airtel, ICICI Bank, HDFC Bank, HDFC, Larsen & Toubro, Maruti Suzuki
India, NTPC, Vedanta and Power Grid Corp of India.