MUMBAI: Indian stocks may open firm on Monday, tracking Friday’s strong closing on the Wall Street after the better-than-expected US jobs data for July. Investors’ mood for the rest of the week will be driven by industrial production reading for June on Friday, a string of Chinese economic data, developments in the Eurozone and earnings of top Indian companies.

US indices gained 2 per cent on Friday after non-farm jobs increased by 1.63 lakh in July and the numbers for June were revised upwards.

But, the jobless rate rose to 8.3 per cent from 8.2 per cent underscoring the weakness in the world’s largest economy and sparking hopes that Fed Chairman Ben Bernanke may hint at another round of a bond-buying when he speaks on Monday or Tuesday.

Investors will keep an eye on the first quarter results of market movers such as State Bank of India, Bharti Airtel, Tata Motors and Mahindra & Mahindra this week.

“We don’t expect any major surprises from quarterly earnings numbers, except in State Bank of India. Change in provisions would be closely watched, though the markets don’t seem to have priced in a possible reduction in provisions,” said Dipen Shah, head, private client group research at Kotak Securities. Investors may have little to cheer about the industrial production reading for June on Friday, which is expected to show a contraction. Barclays expects industrial production to contract 0.6 per cent in June after declining 3.2 per cent in May

“Broader industrial momentum remains weak, despite somewhat stable growth in the core sector,” Barclays analysts said in a note to clients. “We believe the impact of the failure will be significant, perhaps dragging July electricity production growth down to its worst since 2005,” they added.

China’s release of inflation, industrial production and trade data for July next week will be eyed. Analysts expect inflation to ease further and industrial production to edge higher, raising hopes of a monetary policy easing by the Chinese central bank.

At home, technical analysts said indicators are pointing to a sideways movement in benchmark indices in the week ahead. The Nifty index is expected to trade in a range with a positive bias.

There is a clear support for the index at 5150 levels,” said Dharmesh Shah, technical analyst at ICICI Direct. The Nifty closed at 5215 on Friday. “The index could break out of the range at around 5350 levels. While such a rise may take a few weeks, a sudden surprise from SBI results could also prepone the breakout,” he said. Stocks such as Reliance Industries and Yes Bank and mid-cap pharmaceutical companies like Dishman Pharma look positive on the charts, he said.

Source: Economic times

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