Third quarter earnings to set direction

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

IT bellwether Infosys and housing finance major HDFC kickstart the Q3 December 2011 earnings season on Thursday, 12 January 2012, among major companies. IndusInd Bank will announce Q3 December 2011 result on Tuesday, 10 January 2012. Development Credit Bank and GRUH Finance will announce their Q3 December 2011 result on Thursday, 12 January 2012. Sintex Industries and Triveni Turbine will consider their Q3 December 2011 results on Friday, 13 January 2012.



On the macro front, data on industrial production for November 2011 on Thursday, 12 January 2012, could provide cues on the central bank's likely policy stance at the third quarter review of Monetary Policy 2011-12 scheduled on 24 January 2012.

Food inflation plunged into the negative territory in the fourth week of December mainly due to base effect, data released by the government showed on Thursday, 5 January 2011. Fuel inflation edged up though. Food inflation shrank by 3.36% in the week ended December 24, after rising by 0.42% in the preceding week. Inflation in the Primary Articles group fell to 0.1% in the week under review, from 2.7% in the week ended December 17. Inflation in the Fuel & Power group stood at 14.60% in the week ended December 24, versus 14.37% in the previous week.

Euro-zone debt worries continue to haunt bourses. There is speculation that European banks might unwind their investments in Asia to cover losses from their holdings of risky European government debt.

French President Nicolas Sarkozy will meet German Chancellor Angela Merkel in Berlin on Monday, 9 January 2012 for talks that are likely to centre on new rules to enforce budget discipline across the European Union (EU). The two leaders are anxious to flesh out a plan agreed at a December 2011 summit by all EU members except Britain for a new treaty to forge closer fiscal integration, as Europe battles to stem a sovereign debt crisis in the euro zone.

Finance ministers from the EU's 27 members will meet on 23 January 2012 before their leaders hold a summit a week later. They will be under intense pressure to find a definitive solution to the crisis which threatens the very survival of the single currency, 10 years after it came into circulation