Stock markets may move in a range next week; Yellen's testimony eyed

Updated: Saturday, February 8, 2014, 11:08 [IST]

Markets may move in a range next week in the absence of any major triggers. FIIs sold heavily most of this week with token buying seen only on Thursday. The one interesting thing this week was the returns of domestic institutions who made sizeable purchases, amidst selling by foreign institutional investors.

The cash flow position of domestic institutions and mutual funds tends to be much better during the Jan-March period as investors look to tax saving and other schemes from insurance companies and mutual funds. Hence, any declines is likely to be bought into by domestic institutions.

The earnings season has almost drawn to a close with results largely being on the better side. The next few weeks is likely to be steady ahead of the Union elections for 2014.

If one is betting on a BJP led NDA Government at the centre, than one must use the dips of the last few weeks to buy, as many analysts are betting on a pre-election rally.

It's a good time to buy given that the markets have fallen from their highs and a few stocks particularly from the banking space have become cheaper.

A pre-election rally may happen in the stocks of banking, particularly PSU banking stocks and those from high beta names in the real estate, capital goods and construction sectors.

Next week there are not many triggers globally except the testimony of Janet Yellen, the Fed Chair, before the US Congress.

Her testimony would be closely watched for hawkish or dovish signals and hints on further QE3 tapering. To read more on QE3 click here

Expect the markets to trade in a narrow range next week with an upward bias. Pharma and software stocks may continue to hog the limelight, given the fantastic Q3 performance from companies in the sector.

Evenets to watch next week would include results from the likes of Cipla, Tata Motors and Hindalco. Also, watch out for data on the CPI and WPI inflation. Should data come in higher than expected markets could react, particularly banking stocks.

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