Indian shares will take direction from technology earnings this week and should rise if strong profit growth beats expectations, while bonds are seen sliding for a third week amid fresh supplies and record high oil prices.
India's top three software services exporters - Tata Consultancy Services Ltd, Infosys Technologies Ltd, and Wipro - all report July-September earnings this week.
A Reuters poll predicts 41-57 percent profit growth rates over the previous year. Infosys is first to report, on Tuesday.
"If the Infosys numbers are as per expectation or better, it will lead the market," said K.K. Mittal, fund manager at Escorts Mutual Fund. "They usually give conservative guidance and beat it."
"The only concern for the market is crude oil, if it remains above $52 a barrel. Otherwise, economic fundamentals are strong, foreign inflows are strong," he added.
US crude oil futures ended above $53 a barrel on Friday amid a market obsession over tight supply.
Foreign funds have bought a net $241 million worth of Indian shares so far this month, following $601 million worth of purchases in September, keeping the market buoyant.
The 30-issue Bombay Stock Exchange index, which closed on Saturday at 5,757.93 points, is trading at 5-1/2 month highs. It has gained 5.4 percent in the past nine sessions in a pre-results rally, but has consolidated in the last two sessions.
Federal bond yields ended at near two-year peaks on Saturday and are seen continuing to climb as investors fret that soaring crude prices, India's key import, could stoke domestic inflation and push up interest rates, dealers said.
A Monday auction to raise 60 billion rupees for the federal government is also seen pushing up yields as investors struggle to make room for the extra supplies amid the rate worries.
The Indian central bank is set to auction reissued 7.38 percent 2015 bonds on Monday using a multiple-price format and traders are expected to eye the cut-off for further rate cues.
The yield on the benchmark 10-year bond ended Saturday at 6.6967 percent, 32 basis points higher on the week and taking its rise over 12 straight sessions to 66 basis points. The yield last closed higher in mid-November 2002.
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