Corporate Q4 earnings to dictate near-term trend

The fourth quarter earnings season would set the tone for the market, which has risen sharply over the past few weeks. The outlook remains cautious over the near term as heightened risk of inflation drives investors to the sidelines. Next week is a truncated trading week as the market remains closed on Friday, 22 April 2011, on account of Good Friday.



The earnings season began on a weak note with IT bellwether Infosys issuing disappointing earnings growth forecast for the year ending March 2012 (FY 2012) on Friday, 15 April 2011. HDFC Bank, IndusInd Bank and IFCI will declare Q4 results on Monday, 18 April 2011. Container Corporation of India, Power Finance Corporation, IDBI Bank and Zee Entertainment Enterprises will declare their results on Tuesday, 19 April 2011. HCL Technologies, ING Vysya Bank and Yes Bank will declare their results on Wednesday, 20 April 2011. Reliance Industries, TCS, Hindustan Zinc and Jindal Steel & Power will declare their results on Thursday, 21 April 2011. Axis Bank will declare its Q4 result on Friday, 22 April 2011.

The India Meteorological Department (IMD) will give its initial forecast for the June to September South West monsoon rains on Tuesday, 19 April 2011. Recent reports indicate that the country will receive good rains during the current monsoon season. Good monsoon will help ease food inflation and boost rural income, a key driver of consumption demand. About half of India's farm output comes from crops sown during the four-month long South West monsoon season.

Marketmen will also track crude oil prices as about 80% of India's oil consumption is fed by imports and the country is vulnerable to a spike in commodity prices. A sharp surge in crude prices over the past few months have sparked concerns about higher inflation and interest rates.

The wholesale price index (WPI) rose 8.98% in March 2011, higher than 8.31% rise in February 2011 and also ahead of market expectations. The WPI inflation for January 2011 was revised upwards to 9.35% from 8.23%.

The International Monetary Fund has marginally cut its 2011 economic growth forecast for India to 8.2% from 8.4% as persistent inflation pressure forced aggressive monetary tightening. The Reserve Bank of India (RBI) has raised interest rates eight times in the past 12 months, but inflation remains above its comfort level and it has warned of more tightening. The central bank is seen raising key short term policy rates by 25 basis points at its annual 2011-2012 monetary policy review on 3 May 2011.

The bidding for initial public offer Muthoot Finance, India's biggest gold-financing company by loan portfolio, kicks off on Monday, 18 April 2011. The company has set a price band of Rs 160-175 per share for its initial public offering (IPO) to raise up to Rs 901.25 crore. The IPO closes on Thursday, 21 April 2011.