Market may remain volatile ahead of F&O expiry

High volatility is expected in a truncated week ahead as traders roll over positions in futures & options (F&O) segment from the near-month January 2012 series to February 2012 series. The near-month January 2012 F&O contracts expire on Wednesday, 25 January 2012. The stock market remains closed on Thursday, 26 January 2012, on account of Republic Day.

The Reserve Bank of India (RBI) is widely expected to keep its key lending rate viz. the repo rate steady at the Third Quarter Review of Monetary Policy 2011-12 on Tuesday, 24 January 2012, as headline inflation remains high. Data released early this week showed headline inflation eased to two-year low of 7.47% in December 2011 from 9.11% in November 2011. But prices of manufactured products -- a key gauge of core inflationary pressures -- remained elevated.



Investors' focus is currently on Q3 results. Analysts expect weak Q3 December 2011 results due to lower volume growth in a slowing economy, higher raw material costs and higher interest charges. The focus will be on guidance from the company managements on outlook for the remaining part of the year and for the next year.

UltraTech Cement, Asian Paints, Zee Entertainment Enterprises and Godrej Consumer Products unveil Q3 results on Saturday, 21 January 2012. L&T, Maruti Suzuki India, Sterlite Industries (India), Idea Cellular, GAIL (India) and Kotak Mahindra Bank unveil Q3 results on Monday, 23 January 2012.

Lupin, Cairn India, Grasim and Biocon unveil Q3 results on Tuesday, 24 January 2012. Bank of Baroda, Sesa Goa, Union Bank of India, Rural Electrification Corporation, Indian Hotels and Tata Communications unveil Q3 results on Wednesday, 25 January 2012. Blue Star, NHPC, Bharat Heavy Electricals (Bhel), NTPC, Bank of India and Canara Bank unveil Q3 results on Friday, 27 January 2012.

The Federal Open Market Committee (FOMC) holds a meeting on US interest rates on 24-25 January 2012. The Fed is expected to maintain the current interest rate policy. In December 2011, the Fed reiterated its view that current economic conditions would warrant exceptionally low levels for the federal funds rate at least through mid-2013.

The Chinese markets are closed for the whole of next week, while Hong Kong bourses are shut from Monday, 23 January 2012 to Wednesday, 25 January 2012, for Lunar New Year holidays. The stock market in Taiwan which has been shut since 19 January 2012 for Lunar New Year holidays remains closed for the whole of next week.