MAGIC NIFTY FUTURE 6034.30
MAGIC BANKNIFTY FUTURE 10195.96
Interim budget to set the tone
Vote-on-Account, or interim budget for 2014-2015, which the government will unveil during trading hours on Monday, 17 February 2014, will set the tone for the stock market next week. With Q3 December 2013 results season coming to an end, global cues will play a major role in determining trend of the domestic stock market in the near term. The market will closely watch the direction of the rupee and the investment activity of foreign institutional investors (FIIs).
Finance Minister P Chidambaram will present the Vote-on-Account on Monday, 17 February 2014. The objective of a Vote-on-Account is to get Parliament's nod for expenditure to be incurred in the months prior to elections. The next full-fledged budget will be presented by the new government which comes to power after the Lok Sabha polls in April-May 2014.
FIIs, the key driver of Indian markets, have sold shares worth net Rs 2401.30 crore in this month so far (till 12 February 2014). FIIs bought shares worth a net Rs 714.30 crore in January 2014. FIIs have sold shares worth a net Rs 1686.90 crore in this year so far (till 12 February 2014). FIIs bought shares worth a net Rs 113135.70 crore in 2013.
Over the past few sessions, investors are concerned that FIIs may start selling as the Federal Open Market Committee (FOMC) on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion. The Fed also signaled that it is likely to keep reducing bond purchases in the coming months, citing a pickup in US economic activity and improvement in the US labor market. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets in last few years. The FOMC undertakes next monetary policy review on 18-19 March 2014.
The Fed's asset purchases, known more popularly as quantitative easing (QE), led to a flush of capital in the global financial system in recent years. Investors fear that once this program is rolled back, global funds will reallocate their investments to the US dollar and equities, which now have better prospects and are considered a safer bet.
On the domestic front, the rupee is trading near 62-mark against the US greenback. The partially convertible rupee was hovering at 62.1250 on Friday, 14 February 2014.
A weak rupee will hit companies with high imports and high foreign debt adversely. A weak rupee makes imports costlier. On the other hand, IT companies stand to benefit from the rupee's decline. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Few companies will announce their October-December 2013 earnings next week. Castrol India will announce its Q4 results on Monday, 17 February 2014.
GlaxoSmithKline Pharmaceuticals, ABB India, Gujarat Pipavav Port and Paper Products, among others, will announce their October-December 2013 earnings on Tuesday, 18 February 2014.
Esab India will announce its Q4 results on Monday, 17 February 2014.
SKF India will announce its Q4 results on Friday, 21 February 2014.
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