New Delhi: The outcome of the bidding war for UK-based Corus through an auction process will not only be a deciding force for share price movement of Tata Steel but will influence the activities on Dalal Street as well.
The Corus auction would also affect considerably the other steel stocks, as the analysts expect the result of this battle to be a major benchmark for any further consolidation in this space.
Tata Steel's shares have seen alternate bouts of sharp gains and losses over the past four months – it has gone down most of the times when there have been reports about a higher bid and has reclaimed its losses whenever there have been speculations about no further hike in its bid.
While Tata Steel is set to become the world's fifth largest steelmaker if it gets to acquire Corus, the traders expect all the gains to be realised in long term and consider the huge bill the company would have to pay for the deal as a burden on its balance sheet in the short term.
Apart from the fate of steel giant Tata Steel's bid for Anglo-Dutch steelmaker Corus, another factor that will have a say on the volatility of the stock market next week is RBI's stance on the country's interest rate regime.
The market is eagerly awaiting Reserve Bank of India's monetary policy meeting on January 31, when the central bank is expected to take a call on its benchmark short-term interest rates.
The RBI's decision would be crucial, given the fact that inflation has recently surged to a two-year high of 6.12 per cent, which is beyond the central bank's targeted range of 5.0-5.5 per cent.
Though the inflation rate eased a bit last week on the back of falling food prices, the market observers believe an interest rate rise is still in the offing as part of measures to be taken by RBI to control inflation and a swarming credit growth.
The analysts expect RBI's decision, along with the outcome of Tata Steel's bid for Corus, to be major drivers of the market sentiments over the next week.
Besides, the analysts also expect the market to start factoring in the expectations for the union fiscal budget that would be announced at the end of this month, while focus is expected to start shifting away from the corporate results.
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