Stock market outlook: All eyes to be on Europe this week

After last week's surprise rate cut by the Reserve Bank of India (RBI), this week all eyes will be on the European Central Bank (ECB). On Thursday, January 22, the ECB meets to consider a quantitative easing (QE) package. In fact, the market has mostly discounted that the ECB will begin its government bonds buying programme to stimulate the European economy.

After Switzerland removed its long-standing exchange rate of 1.20 Swiss Franc to one euro it poses more concerns for the euro zone. There are concerns of the euro zone disintegrating due to the Greek crisis. On Sunday, January 25, Greece is set to hold snap elections after it failed to elect a new president in a third round of voting late last year.

Eyes will also be set on the World Economic Forum from January 21 to 24 in Davos, Switzerland. The market would also keep an eye on Wednesday, January 21, when Bank of Japan meets to decide on its interest rates. The week will also see some important data coming from China. On Tuesday, January 20, China will announce its GDP data for the quarter ended December 2014. HSBC's China Manufacturing PMI data will come on Friday.

The market will also react to corporate results for the quarter ended December from Hindustan Unilever, ITC, Hindustan Zinc, Colgate-Palmolive, Ultratech Cement, Kotak Mahindra Bank, Biocon, Cairn India and Raymond.

Meanwhile, as far as India is concerned the next big domestic trigger is expected from the Union Budget 2015 amid expectations the government will kick-start its reform process. In the coming days the market will also start building positions ahead of the budget. But investors should tread cautiously and build long-term portfolio with quality companies and not think like a trader or be one.