MARKET EYE WEEKAHEAD-India inflation data key to debt/FX

Fri Jan 11, 2013 3:49pm IST

* December headline inflation will be a key indicator for Indian
debt/FX ahead of the Reserve Bank of India's policy review on
Jan. 29.
* Wholesale prices are expected to have risen 7.40
percent from a year ago, a Reuters poll showed. 
* Any reading below 7.20-7.25 percent should cement the case for
at least a 25 basis points rate cut after weak November factory
data.
* The 10-year yield is likely to trade in a
7.80-7.90 percent band next week. The yield has slumped 30 bps
at Friday's low in 15 sessions on expectations of rate cuts.
* Traders are also looking for a potential announcement on a
widely expected hike in fuel prices after the oil ministry sent
a proposal to the cabinet this week. 
* An announcement may not have too much impact given it has been
long awaited.
* For the rupee, investors will also be watching
capital inflows after foreign institutional investors bought a
net $1.56 billion in equities so far this month.
* Shares could be volatile as major companies such as Reliance
Industries Ltd and Tata Consultancy Services 
are due to report results.
    
    KEY FACTORS TO WATCH
Mon.: Dec wholesale priced inflation, consumer price inflation 
Fri.: Weekly forex data and bank credit data

 (subhadip.sircar@thomsonreuters.com/;
subhadip.sircar.thomsonreuters.com@reuters.net)
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