Indian Markets Outlook for the week – 16.03.2015 to 20.03.2015

Indian Markets Outlook for the week – 16.03.2015 to 20.03.2015

For the week ahead, share indices will take cues from the Budget session of the Parliament, the US Federal Reserve's stance on interest rate hike, and the Wholesale Price Index-based inflation data for February. The first half of Budget session of the Parliament will continue till Mar 20, and will be keenly watched as approval for a hike in the foreign direct investment limit for the insurance sector has raised hopes of more reforms seeing the light of the day.

The US Federal Open Market Committee, meanwhile, is scheduled to commence its two-day
meeting on Tuesday. The US central bank's view is of importance as it is likely to impact flows from foreign institutional investors. WPI inflation data for February will be released on Monday.

Apart from these, the coal block auction and the telecom spectrum auction will keep shares of power, metal, steel and telecom shares in focus.

Despite a number of events on the watch list, the sentiment in the market is subdued after
economic data released post market hours Thursday dashed hopes of another rate cut by the Reserve Bank of India. Data showed that in January, Index of Industrial Production moderated to 2.6%, while headline inflation rate for February based on CPI rose to 5.4%, marginally higher than the estimated 5.3%. This disappointment was reflected in the market movement yesterday, with indices shedding 1.5% each to end at an over one-month low.

Deutsche Bank said if the Consumer Price Index based inflation data moves in line with their
expectations in the next six months, then the 6% Jan 2016 target for inflation will not be
difficult to achieve. In such a scenario, the average CPI inflation for FY16 should be about
5.5%, which will allow RBI to cut rates by another 50bps. The bank also believes that the RBI will prefer cutting rates in the first half of the year, rather than the second half, "given that the second half of the year could see financial market volatility increase due to potential Fed policy normalisation".

Stock-specific action is likely to see Blue Star in action after the said it will sell its electronics
and industrial operations to its arm for 1.1 bln rupees.