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Anticipate higher volatility this week in some of the Asian markets, as it is truncated.
India is closed on January 26 (Republic Day) while China and Taiwan are closed for the whole week for New Year. Hong Kong will also be closed three days this week, from January 23 to January 25.
Indian benchmark indices are expected to remain range bound and within 1.5 per cent on either side of last week's close, albeit with higher volatility, this week.
RBI's monetary policy pronouncement on Tuesday will cause some volatility, after which it will subside.
Bond dealers are neither expecting a rate cut nor a cut in CRR (cash reserve ratio) from the central bank. Yield on 10 year G-Sec is hence expected to harden by 10-15 basis points this week and be in the 8.3-8.35 per cent range.
F&O expiry in Indian indices is however likely to be 1.5 per cent to two per cent lower than last Friday.
Quarterly results from India Inc this week will see margins being sandwiched by declining sales volume on the revenue side and increasing raw material and interest cost on the expenditure side.
Maruti, Colgate, NTPC, BHEL Bank of Baroda, Bank of India, Cairn and Idea Cellular are some companies whose results are expected this week.
Though currency strategists expect the Indian rupee to continue its rally towards Rs 49.75 to a $ this week, it could actually surprise the street with a marginal downside from last week's close of 50.225 post the RBI policy and breach 50.5 to a $.
On the global front, news reports of EU sanctions on Iran is expected to strengthen Nymex crude prices but it faces stiff resistance at US$ 101.5 to a barrel, levels.
The Euro will face resistance at every 50 pips against the USD whenever the market tries to push up the Euro. The street though is anticipating it to depreciate and touch USD 1.278 levels to a Euro, down from last week's close of USD 1.2931 to a Euro.
The dollar index, (an index showing the US dollar's movement against a basket of world's major currencies) will not go down by more than one dollar this week from last week's close of 80.156.
US 10-year treasury is estimated to touch 1.98 per cent his week though it is unsustainable according to bond market watchers.
Gold is not projected to go below $1630 this week to an ounce from last week's close of $1664 to an ounce.
Important data points from around the world this week include Eurozone's consumer confidence for December (estimated at minus 20) on January 23 and Bank of Japan's rate decision on January 24 (estimated unchanged at 0.1 per cent).
On January 25, US Fed's rate decision (estimated unchanged at 0.25 per cent) and Eurozone's business climate index IFO (estimated at 107.8) will come in.
US durable goods orders (estimated at two per cent) and Bank of Japan's policy meeting minutes will be announced on January 26 and the US producer price index (estimated at two per cent), US Q4 GDP annualized (estimated at three per cent) and Eurozone money supply M3 (estimated at 2.3 per cent) will come in January 27.
>raghavendrarao.k@thehindu.co.in
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