Market will be closely watching US markets at a time when US recession worries loom large on global markets. The Q3 December 2007 results announced by corporate India, so far, have been more or less in line with market expectations.

Market men would be closely looking at Q3 results of ONGC, Satyam Computer Services, Grasim Industries, HDFC Bank, Dr. Reddy's Laboratories and Bharat Heavy Electricals which are expected next week.

There might be some liquidity drain from the secondary market as the mega initial public offer (IPO) of Reliance Power received an overwhelming response to its IPO which ended on 18 January 2008. Meanwhile as per reports, state-owned telecom services provider Bharat Sanchar Nigam (BSNL) reportedly plans to launch India's biggest initial public offer to raise about Rs 40,000 crore (over $10 billion).

US recession fears may bog down the markets as seen last week after global markets followed US market slump. Recently, Citigroup posted first-ever quarterly loss and disappointing holiday shopping numbers fueled fears that the world's largest economy was heading into a recession. Pessimism about the US economy further mounted after Intel Corp the world's largest chip maker, posted earnings and a profit forecast that disappointed investors. However, JP Morgan's results suggested some banks can still make a profit despite turmoil in the credit market.

Market could find some support from optimism that Federal Reserve Chairman Ben Bernanke will cut interest rates at its meeting later in the month. This in turn may results in higher FII inflow to emerging markets including India. FII inflow in January 2008 totaled Rs 780.20 crore (till 16 January 2008). FIIs had bought shares worth Rs 5,579.10 crore in December 2007.

India's annual inflation, based on the wholesale price index (WPI), moved up 3.79% in the week ended 5 January 2008 compared with 3.5% in the week ended 29 December 2007.