Looking forward, the market may consolidate in a truncated week amid lack of major triggers in the near-term. The Indian stock markets will remain closed on first trading day of next week that is Monday, 20 August 2012 on account of Ramzan Id.
"For the coming week, the Nifty index may consolidate in a range from 5,300 level on the downside and 5,400 level on the upside," Nidhi Sarswat-Sr.Research Analyst-Bonanza Portfolio Ltd, said.
"If the Nifty crosses above 5,400 level, the likely target on the upsides are 5,480-5,550. "Profit-booking is likely at current levels and also until 5450 level is crossed decisively. Global markets will also be affecting the overall market sentiment," she added.
Since the last four weeks the index has shown bullish signs and has gained almost 6 per cent from its lows of 5,030. The index has breached above its crucial resistance level of 5,350 on closing basis which is a positive indicator for near-to-medium term.
The continuous buying of Indian stocks by foreign funds supported the market sentiment this week. "Overseas, investment into Indian stock markets has crossed $11 billion so far this year, with more than $1 billion being pumped in this month alone," PTI reported.
Foreign Institutional Investors (FIIs) have infused a net amount of $1.02 billion (about Rs 5,692 crore) in August so far, taking the total for this year to $11.4 billion (Rs 57,958 crore) in Indian equities, according to the Securities and Exchange Board of India (Sebi).
"Market experts said foreign investors have factored in deficient monsoon, slowing economic growth and high interest rate regime, and are pinning hopes on the government's fresh initiatives on reforms," said the report.
Inflation numbers came out on the 14 August 2012, reignited hopes of rate cut by the Reserve Bank of India (RBI). The inflation for the month of July 2012 came in at 6.87per cent as compared to 7.25 per cent in the previous month.
However, economists at a few brokerages have advised investors to take the reported inflation number for July with a pinch of salt as it does not reflect several price increases and includes some one-off events such as a high base.
"The unusual decline in reported vegetable prices, limited representation of higher sugar prices and a sharp fall in fuel inflation distorted the overall number. Much against market expectations, they also feel RBI is unlikely to cut rates based on a "transient fall" in inflation," ET reported.
Major events lined up for next week are July consumer price index which will be out on Tuesday. The data is widely expected which may give investors another chance to measure inflation after the July wholesale price index showed an unexpected fall.
"We believe that to assess the trend in inflation expectations, CPI is the most important measure. In the past, price levels as measured by Wholesale Price Index (WPI) and CPI (Industrial Workers) usually tracked a similar trend," Morgan Stanley said in a report.
"The progress of monsoon rains will be closely watched next week," Sharekhan said in a report. The monsoon rains--which make up around 70 per cent of India's annual rainfall--are crucial to the nation's agriculture sector and broader economy.
"An India-Mauritius joint panel will discuss a series of proposals to review the double taxation avoidance treaty between the two nations on 22-24 August in Mauritius," Sharekhan report added.
Maruti Suzuki India Ltd will be in focus after India's largest car maker is set to restart production on a small scale at its Manesar factory on Tuesday after a deadly unrest that shut the plant.
Initially, the Manesar plant will operate under heavy security at one-tenth its capacity, with 300 workers earmarked to roll out 150 Swift hatchback and DZire sedan on a daily basis from its two plants.
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