Nifty may move in the range of 4,950 and 5,085

Positive earnings reports from domestic corporates, lower inflation numbers and supportive cues from the global arena helped the market close higher for the third week in a row. While the benchmarks closed 4% higher in the week, all eyes will now be on the Reserve Bank of India’s 24th January quarterly policy review.

The Sensex settled 584 points higher at 16,739 and the Nifty closed the week at 5,049, up 183 points. The Nifty is likely to move in the range of 4,950 and 5,085.

The market opened lower on Monday following the nine-nation sovereign downgrade by S&P over the weekend but settled higher on late buying. Global cues and a positive set of earnings reports helped the market close with gains on Tuesday.

Domestic growth concerns and the World Bank’s cut in global growth forecast saw the market snapping its four-day winning streak on Wednesday. However, the market went on to close in the positive on the last two trading days as earnings reports continued to meet market expectations.

Among the sectoral indices, BSE Realty jumped 8% and BSE Oil & Gas surged 6% while BSE Fast Moving Consumer Goods index lost 1%.

The top Sensex stocks in the week were Maruti Suzuki (up 13%), Sterlite Industries (up 10%), Tata Power, Bajaj Auto and Hero MotoCorp (up 9% each). The main losers were Mahindra & Mahindra (down 5%), ITC (down 3%), TCS and Cipla (down 1% each).

The key gainers on the Nifty were Reliance Infrastructure (up 17%), Maruti Suzuki (up 13%), IDFC, Jaiprakash Associates (up 11% each) and Sterlite Ind (up 10%). M&M (down 5%), ITC (down 3%), Dr Reddy’s, SAIL and TCS (down 1% each) were the main losers on the index.

Encouraged by a dip in December inflation, the finance minister projected March-end numbers at 6%-7%. Headline inflation fell to a two-year low of 7.47% in December 2011 from 9.11% in the previous month.

India’s exports rose an estimated annual 6.7% to $25 billion in December while imports for the month were at $37.8 billion, resulting in a trade deficit of $12.8 billion, trade secretary Rahul Khullar said on Monday.

Besides, food inflation remained in the negative zone for the third straight week, at (-) 0.42% for the week ended 7th January from (-) 2.90% in the previous week. However, experts feel that the decline in prices of food articles will not be enough to prompt the RBI to cut key interest rates at its forthcoming monetary policy review on 24th January.

In a major boost to M&A deals, the Supreme Court on Friday set aside the Bombay High Court judgement asking Vodafone to pay income tax of Rs11,000 crore, holding that tax authorities do not have jurisdiction on an overseas transaction. However, immediately after pronouncement of the SC ruling, finance minister Pranab Mukherjee and law minister Salman Khurshid held consultations on the issue.

Although the issues relating to taxation of overseas deals are likely to be resolved with implementation of the Direct Taxes Code (DTC), in the Vodafone case the government has an option to either file a review petition or effect legislative changes.

On the global front, Greece is working on an initial deal with private bond holders that would help it from a debt default. The deal is expected to pave the way for a fresh aid package before bonds worth 14.5 billion euros ($18.5 billion) come up for redemption in March.