Week Ahead: Market to move sideways; Global cues, results to provide direction

The market is likely to move sideways amid cautious trades for a better part of the coming week. Though global factors will contiue to play a role in dictating the trend, investors are likely to wait for the Union Budget for some clear direction.

With industrial production plunging sharply in December, there is every likelihood of the central bank reeling out some rate cuts over the next few quarters. However, the market will have to wait till 15 March 2012 to know what the apex bank has in store. The Union Budget for 2012-2013 will be presented on 16 March 2012.

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Since these two events are nearly a month away, the market is likely to see several ups and downs till then with stock specific stories and global economic news providing the triggers.

According to the data released by the government on Friday (10 February 2012), the Index of Industrial Productivity plunged to lower than expected levels of 1.8% in December versus 5.9% in December. The IIP grew at 3.6% for the April-December time period. The manufacturing sector grew at 1.8% versus 6.6% in November, while the capital goods sector growth fell to 16.5% versus -4.6% in November.

According to the data released by the Trade Secretary Anand Khullar on Thursday (9 February 2012), India's January exports rose 10.1% to $25.4 billion while imports rose 20.3% to $40.1 billion, leaving a trade deficit of $14.7 billion. India's exports reached $242.8 billion between April and January, Khullar said, citing provisional data.

The reporting season is almost over with just a few more top rung companies yet to come out with their numbers. The market will start the week with investors reacting to earnings reports from State Bank of India, Indian Oil Corporation, Cipla, Sun Pharmaceuticals, Coal India, SAIL and Reliance Power. All these companies will report their earnings on Monday. On Tuesday, Reliance Infrastructure, Tata Motors and Jaiprakash Associates will announce their results.

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Having run up pretty sharply since the beginning of this calendar year, the market could well see some corrective spells during the course of next week. However, in the event of foreign institutional investors continuing to pump in funds, the downside risk for the market looks somewhat limited.

Worries about the European economy, a drop in consumer sentiment in the U.S. and a weak economic report from China dragged down stock prices on Wall Street on Friday and this is likely to set up a weak start for Asian markets on Monday.