Markets next week are expected to remain range-bound - Eastern Financiers

Markets next week are expected to remain range-bound ahead of the crucial earnings season that kick-starts shortly. From the macro perspective, the index of industrial production data and the trade deficit data for the month of November and December periods respectively would get announced, and would be pivotal in shaping the market trajectory. Investors will also keep an eye on the HSBC services PMI for the month of December. Apart from these, foreign fund flows would be keenly watched-out by market participants along with movement in the commodity prices. Equally important would be the movement of the Indian currency, vis-à-vis other international currencies. Important sectoral developments could also emerge from the meet of the Telecom commission on proposal to levy uniform annual fee on spectrum usage.

The most important economic data that would hog the limelight next week would be the factory output data as measured by the Index of Industrial Production, for the month of November. In October, industrial production entered the negative territory after three months, contracting by 1.8 per cent mainly due to poor performance of the manufacturing sector. Also, the growth in the eight core sector industries, which has a combined weightage of 38-percent in the overall industrial production, pointed out to a snobbish growth in the industrial activities. We expect the industrial production to continue contracting in November, albeit at a slower pace than the previous month.

The other important data that would be on the investor's watch-list is the trade deficit data for the month of December. India's trade deficit narrowed to $9.2 billion in November, driven by a record contraction in imports even as exports growth slowed after growing in double digits for four consecutive months. Slower domestic demand and curbs on gold imports brought down merchandise imports to its lowest level since March 2011, contracting 16.37% to $33.8 billion during the month, while exports grew 5.86% to $23.2 billion. However, the present month's trade data would be crucial from the point of view of exports as it holds the key of future improvement in trade deficit.

On the sectoral front, the inter-ministerial Telecom Commission is likely to meet on January 7 mainly to discuss proposal of levying uniform annual fee on spectrum usage across all players in the sector. The views of the commission will be sent to the Empowered Group of Ministers on telecom, headed by Finance Minister P Chidambaram, which will take a call on it. Any development in this regard would have an impact on the stocks of the sector.

Globally, there would be a lot of important data announcements that would have an impact on our markets. These include UK Services PMI, US non-manufacturing PMI, US employment change, UK Interest rate decision, etc.

Source : Equity Bulls

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