Auto, cement stocks in focus on monthly sales data

Auto and cement stocks will be in focus as companies start unveiling monthly sales data for December 2010 from the first week of January 2011. Many auto firms including Mahindra & Mahindra, Maruti Suzuki and Bajaj Auto are reportedly planning to raise prices of their vehicles from 1 January 2011 due to rise in input costs.



Economic data will also be on investors' radar during the first week of the new calendar year 2011. The return of foreign fund managers from Christmas and New Year vacation, will lifts volumes on the bourses.

Corporate earnings for Q3 December 2010, which will start trickling in from the second week of January 2011, will set the direction for the market in the near term. Analysts reckon that corporate profit margin will be under pressure due to higher commodity prices, rising cost of debt, surging wages and increased competitive intensity across sectors. IT bellwether Infosys kickstarts the earnings reporting season on 13 January 2011.

The data on HSBC Manufacturing Purchasing Managers' Index for December 2010 is likely to be announced on Monday, 3 January 2011. The index, indicating the performance of the manufacturing sector, had risen to 58.4 in November 2010 from 57.2 in October 2010.

The data on HSBC Markit Business Activity Index for December 2010 is also likely to be released next week. The HSBC Markit Business Activity Index, indicating the performance of the services sector, had risen to 60.1 in November from 56.2 in October. It was the best showing for the index since July, and the 19th straight month it has remained above the 50 mark that divides growth from contraction.

Over the medium term, emerging market stocks may continue to benefit from ample global liquidity. Central banks in the US, Europe and Japan have been adopting loose/expansionary monetary policy in a bid to revive economic growth. Annual inflow from foreign funds reached a record level in India in calendar 2010.