Markets weekahead: RBI policy, earnings key for shares

A man talks on his mobile phone as he walks past the logo of the Reserve Bank of India (RBI) inside its head office in Mumbai June 14, 2010.

Reuters Market Eye - The Reserve Bank of India's policy review on Tuesday and earnings of blue-chip companies will be the key factors for stocks next week.

Stock investors are widely anticipating a 25 basis point rate cut when the RBI sets policy on Tuesday, to be followed by another 25 bps cut in March, making the guidance provided by the central bank as important as the rate decision itself. (Read preview story here)

As a result, stocks could see a steep selloff if the RBI surprises markets by keeping key lending rate unchanged or by signalling a reduced scope of rate cuts ahead.

ICICI Bank Ltd (ICBK.NS), Bharti Airtel Ltd (BRTI.NS), and Bharat Heavy Electricals Ltd (BHEL.NS) are shaping up as the highlights among companies reporting October-December results.

Volatility is also expected to increase as Thursday marks the expiry of January derivatives contracts.

FACTORS TO WATCH

Monday: RBI macro-economic report (5 p.m.); JSW Steel Ltd (JSTL.NS) earnings

Tuesday: RBI's review (decision at 11 a.m.); Reliance Capital Ltd RCAP.NS and Sterlite Industries Ltd (STRL.NS) earnings

Thursday.: ICICI Bank, Lupin Ltd (LUPN.NS) and Bharti Airtel's earnings; December fiscal deficit data; derivatives expiry

Friday: BHEL and IDFC Ltd (IDFC.NS) earnings

(Reporting by Abhishek Vishnoi)