Now that the presidential elections are over, markets are expecting a wave of reforms. Already, there are impediments to the reforms process in the form of sulking allies. And the latest is the NCP, which is hankering for more say and more power in the government. If Manmohan Singh is likely to spend time trying to fire fight with sulking allies he might get less time to spend on reforms.
The earnings season has also been mixed so far with most of the earnings, except Infosys coming in line with expectations.
Globally, things were looking up until Friday, after a spate of good results from across the globe including the likes of Google and IBM. Markets in Europe had their best performance since May, however, they lost some sheen on Friday owing to worries over Spain debt. Stocks in Europe and US finished near the day's low on Friday, breaking a three-day winning streak.
Clearly, as we head into the next week a lot would depend on how Manmohan Singh pushes through reforms.
Markets are expecting a diesel, kerosene and LPG hike to cut the deficit. If there is no announcement on this front, the markets maybe disappointed. Hence, it is advisable to tread with caution, since the markets have run up quite a bit in the last few weeks and too much has been built by way of expectations. In the best case, the markets might trade in a narrow range for the next week as well, as domestic triggers are not too many.