Investors to turn cautious after Euro Zone downgrade

K. RAGHAVENDRA RAO | Updated on March 12, 2018 Published on January 15, 2012

Inflation still priority: A man talks on the phone outside the Reserve Bank of Indiabuilding in Mumbai. Marketmen say the central bank will cut rates on the January 24 policy review only after considering the inflation number. (file photo)

Nifty could scale 5000 in first half of week

The sovereign rating cut of nine countries in the Euro Zone by Standard & Poor's will increase risk aversion in the financial markets this week.

In India, investors would be tracking Monday's inflation figures and the third quarter results of nine Nifty stocks closely.

It would also be interesting to monitor the quarterly performance of two stocks, SKS Microfinance and MindTree this week.

The Chairmen of both companies exited in the calendar year 2011. While former Chairman of MindTree, Mr Ashok Soota, already announced his new venture, Happiest Minds in end-August 2011, Mr Vikram Akula, former Chairman of SKS Micro, is yet to.

The marketmen feel that RBI could cut rates on January 24 only after seeing the inflation number.

Bond traders expect the 10 year G-sec to soften from the existing 8.19-8.20 per cent levels to 8.05 per cent en-route to 8.10 levels.

The Nifty might just cross 5000 in the first half of this week from where it could again be pulled down to below last week's close by the end of the week.

The dollar is expected to stay between Rs 51 and Rs 52 this week.

risk aversion

The global markets will see risk aversion and this increases the chances of the US treasury yield softening to 1.85 per cent levels.

Though the majority of currency strategists are strongly bearish on the Euro versus the $ and are expecting one Euro to touch $1.2300 levels, it may actually surprise the street on the upside touching $ 1.3050 and even $ 1.3120 levels to a Euro this week.

The bearish view on crude and gold gets strengthened if they breach $ 97.5 to a barrel and $1,590 to an ounce on the downside this week.

Finally, global data for this week include the December consumer price index data from the UK (forecast at 4.2 per cent), Euro Zone (forecast at 2.8 per cent) and the US (forecast at 3.1 per cent).

Other important data sets are the ZEW economic sentiment survey from the Euro Zone (forecast at minus 49.2), Chinese real GDP (forecast at 8.7 per cent), UK jobless claims (forecast at 7,000), European Central Bank's January monthly report and the change in German producer price index (forecast at 4.6 per cent).

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Published on January 15, 2012
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