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Stock prices are expected to tumble next week following RBI's liquidity tightening moves, announced post market hours yesterday, and as waning prospects of a rate cut begin to pinch demand. The RBI on Thursday said it will mop up close to 220 bln rupees every Monday in a move aimed at curbing volatility in the foreign exchange markets. This coupled with the release of key macroeconomic data and the earnings of key index constituents State Bank of India, Oil and Natural Gas Corp, and DLF could set the trend for the week. Rate sensitive sectors such as banking, realty and automobiles are expected to bear the brunt of RBI's moves.
The RBI will have to continue these measures for at least a month or more, and if rupee falls to 57 or 58 rupees per dollar as a result, only then rate sensitive stocks will see any turnaround. The fall, though, may not be steep as the market was bracing for some measures from the RBI. The approval of the Companies Bill could have a positive impact.
Yesterday, the Rajya Sabha passed the Companies Bill 2012, paving the way for its enactment. On Monday, the Central Statistics Office will release the index of
industrial production for June and consumer price index inflation for July. India's industrial growth is likely to contract 0.5% in June, staying in the negative territory for the second consecutive month, due to weakness in infrastructure sector and subdued external demand. SBI, the country's largest public sector bank, will announce its numbers on Monday. The lender is seen posting a net profit at 34.54 bln rupees, down 8% on year, but up 5% on quarter. Investor interest in the bank's stock is likely to be guided by its slippages, and concerns over asset quality.
Stock prices are expected to tumble next week following RBI's liquidity tightening moves, announced post market hours yesterday, and as waning prospects of a rate cut begin to pinch demand. The RBI on Thursday said it will mop up close to 220 bln rupees every Monday in a move aimed at curbing volatility in the foreign exchange markets. This coupled with the release of key macroeconomic data and the earnings of key index constituents State Bank of India, Oil and Natural Gas Corp, and DLF could set the trend for the week. Rate sensitive sectors such as banking, realty and automobiles are expected to bear the brunt of RBI's moves.
The RBI will have to continue these measures for at least a month or more, and if rupee falls to 57 or 58 rupees per dollar as a result, only then rate sensitive stocks will see any turnaround. The fall, though, may not be steep as the market was bracing for some measures from the RBI. The approval of the Companies Bill could have a positive impact.
Yesterday, the Rajya Sabha passed the Companies Bill 2012, paving the way for its enactment. On Monday, the Central Statistics Office will release the index of
industrial production for June and consumer price index inflation for July. India's industrial growth is likely to contract 0.5% in June, staying in the negative territory for the second consecutive month, due to weakness in infrastructure sector and subdued external demand. SBI, the country's largest public sector bank, will announce its numbers on Monday. The lender is seen posting a net profit at 34.54 bln rupees, down 8% on year, but up 5% on quarter. Investor interest in the bank's stock is likely to be guided by its slippages, and concerns over asset quality.
