Market outlook for next week: Focus to remain on banks

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 Market outlook for next week: Focus to remain on banks
It was a bad week for private sector banking names last week, with ICICI Bank, HDFC Bank and Axis Bank all dropping following allegations of money laundering. On Friday these private sector banking names led indices lower.

Next week banking names would remain volatile, as the RBI meets to decide action in its Monetary Policy Review meeting slated for March 19. Most analyst are expecting the RBI to cut rates by 25 basis points. This is actually a given and should the RBI decide against the cut, it could lead to a sell-off in the markets.

However, with core inflation falling, it's almost certain that the RBI would oblige with a rate cut. This is likely so lead to volatility in the banking names next week.

Apart from the Monetary Policy Review there are no major triggers for next week. Markets would continue to focus on international cues, which have been robust. The US indices continue to hit successive peaks, though it fell on Friday. Despite the marginal fall the Dow ended with gains for the fourth successive week in a row.

European shares ended weak on Friday, but a bailout for Cyprus could buoy sentiments in the coming week.

Asian markets continued to exhibit a steady trend with data from China, now remaining crucial to help momentum in the future.

With the Monetary Policy likely to be over by March 19, the focus would not shift to the earnings season. Markets are not expecting too much by way of earnings uptick for the quarter ending March 31, 2013. The earnings focus is likely to shift to software companies which have rallied in the past few weeks and unless they perform well, we could see these stocks drag indices lower.

Otherwise, no major surprises are expected from the traditional brick and mortar companies and banks.

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Read more about: hdfc bank, icici bank
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