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Benchmark indices will trade in a narrow range next week as investors await cues from companies' Oct-Dec earnings, which will start with Nifty major Infosys reporting its result on Jan 10. IndusInd Bank will also report its third quarter earnings on Jan 10. Information technology stocks are likely to be the top performers, as they will attract more buying. Some IT scrips may scale lifetime highs, given that some of them are trading very close to their peak levels. Yesterday, the CNX IT Index hit a lifetime high of 9684.00 points. Some market participants expect IT companies to report moderate earnings growth due to the Oct-Dec period being a seasonally weak quarter for the sector due to furloughs and fewer working days. We expect it (Infosys) to revise upwards its revenue growth guidance to at least 12% (9-10% earlier), implying a mere 0.5% QoQ growth in Q4 FY14 to achieve 12% YoY growth. On the domestic economic data front, the Central Statistics Office will detail Index of Industrial Production for November on Jan 10.
Focus on the earnings season is likely to take precedence over the release of economic data. Along with the expected positive momentum in IT stocks, interest-rate sensitive stocks such as banks are likely to see some selling pressure. However, mid-cap public sector banks may fare better as compared with their counterparts in the banking space as they have performed well recently and are likely to rise more given expectation of strong quarterly earnings. The index may move higher than its resistance level, as expectations around Infosys' earnings build up during the week.
Benchmark indices will trade in a narrow range next week as investors await cues from companies' Oct-Dec earnings, which will start with Nifty major Infosys reporting its result on Jan 10. IndusInd Bank will also report its third quarter earnings on Jan 10. Information technology stocks are likely to be the top performers, as they will attract more buying. Some IT scrips may scale lifetime highs, given that some of them are trading very close to their peak levels. Yesterday, the CNX IT Index hit a lifetime high of 9684.00 points. Some market participants expect IT companies to report moderate earnings growth due to the Oct-Dec period being a seasonally weak quarter for the sector due to furloughs and fewer working days. We expect it (Infosys) to revise upwards its revenue growth guidance to at least 12% (9-10% earlier), implying a mere 0.5% QoQ growth in Q4 FY14 to achieve 12% YoY growth. On the domestic economic data front, the Central Statistics Office will detail Index of Industrial Production for November on Jan 10.
Focus on the earnings season is likely to take precedence over the release of economic data. Along with the expected positive momentum in IT stocks, interest-rate sensitive stocks such as banks are likely to see some selling pressure. However, mid-cap public sector banks may fare better as compared with their counterparts in the banking space as they have performed well recently and are likely to rise more given expectation of strong quarterly earnings. The index may move higher than its resistance level, as expectations around Infosys' earnings build up during the week.
