Market Outlook for the Week 15 December 2014

                                                         
                                                                       

Wholesale price index (WPI) inflation data for November 2014, corporate advance tax for the third installment of 15 December and developments in the ongoing winter session of parliament are the domestic factors that will be closely watched during the forthcoming week. Among global cues, all eyes will be on the outcome of the Federal Open Market Committee (FOMC) monetary policy review and snap election in Japan and Greece's presidential elections.

Apart from domestic and global economic data, trend in global markets, investment by foreign portfolio investors (FPIs), the movement of rupee against the dollar, and crude oil price movement will dictate near term trend on the bourses.

The market will on Monday, 15 December 2014 react to data on CPI inflation for November 2014 to be released after trading hours on Friday, 12 December 2014. Inflation is seen easing further in November 2014 and growth in industrial production is seen improving a bit in October 2014. The annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India is seen easing further to 4.4% in November 2014, from 5.52% in October 2014, as per the median estimate of a poll of economist carried out by Capital Market.

The annual rate of inflation based on the wholesale price index (WPI) is seen easing further to 1.2% in November 2014, from 1.77% in October 2014, as per the median estimate of a poll of economist carried out by Capital Market. The government will release the inflation data based on wholesale price index (WPI) for November 2014 at 12:15 IST on Monday, 15 December 2014.

Corporate advance tax payment for the third installment which is due on Monday, 15 December 2014, could provide clues on Q3 December 2014 corporate earnings. Advance taxes are collected in four installments -- 15% by 15 June; 40% by 15 September; 75% by 15 December and 100% by 15 March.

Shares of PSU OMCs will be in focus as these companies will review fuel prices on Tuesday, 16 December 2014 based on the average imported oil price in the preceding fortnight.

Meanwhile, the Indian government intends to get the Insurance Laws Amendment Bill that seeks to enhance foreign investment limit in the capital starved insurance sector passed during the ongoing winter session of parliament. The Union Cabinet recently approved the official amendments to the Insurance Laws (Amendment) Bill, 2008 and introduction in the Rajya Sabha when the bill is taken up for consideration and passing. The Parliamentary Select Committee in its report tabled in Rajya Sabha on 10 December 2014 agreed a composite cap of 49% on foreign investment in the insurance sector, which will include all types of foreign investment as opposed to the 26% foreign direct investment (FDI) allowed at present. Finance Minister Arun Jaitley had said in his maiden budget speech in July that the composite cap in the insurance sector should be increased to 49% from the current level of 26%, with full Indian management and control.

Also the government is reportedly likely to introduce the constitutional amendment bill for goods & services tax (GST) during the ongoing winter session of parliament.

The US Federal Reserve will release the industrial production data for November on Monday, 15 December 2014. Japan reports fourth-quarter Tankan business confidence on the same day.

On Tuesday, 16 December 2014, the Bank of England (BOE) publishes the results of stress tests of UK banks alongside its twice-yearly Financial Stability Report. On the same day, the HSBC China manufacturing PMI for December 2014 will be declared.

On Wednesday, 17 December 2014, the BOE publishes minutes of its Monetary Policy Committee's December meeting, when the benchmark interest rate was held at a record-low 0.5%.

The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on Wednesday, 16 December 2014 and Thursday, 17 December 2014. The policy meeting will be keenly watched for any hints on the timing of interest rate increases in the world's biggest economy.

On Friday, 19 December 2014, the Bank of Japan will announce monetary policy at the end of a two-day meeting in Tokyo. The bank kept its policy unchanged in November after increasing monetary easing on Oct. 31.

Meanwhile, Japan faces a snap election on Sunday, 14 December 2014 with Prime Minister Shinzo Abe's “Abenomics” on trial. Greece's presidential elections will be held on Wednesday, 17 December 2014.