While the overall trajectory for markets remains positive in the coming week, there are several factors that will decide the sustainability of gains.
“The Q3FY24 earnings season will be the biggest factor in driving the market movement,” said Arvinder Singh Nanda, senior vice president, Master Capital Services.
Some of the major companies like HDFC Bank and Reliance Industries are scheduled to release their earnings in the week ahead.
Besides earnings, global markets, corporate actions, and fund flows will also decide the course of action for Dalal Street.
Q3 Earnings
HDFC Bank, Asian Paints, LTI Mindtree, IndusInd Bank, Hindustan Unilever, Paytm, RIL, and UltraTech are the major companies releasing their December quarter earnings next week.
The other companies include L&T Technology Services, South Indian Bank, Tata Communications, Shoppers Stop, Poonawalla Fincorp, Home First Finance, ICICI Prudential Life Insurance, Happiest Minds Technologies, Federal Bank, ICICI Lombard General Insurance, and Bank of Maharashtra. Shares of HCLTech, Wipro, and Avenue Supermarts will be in the limelight on Monday as they reported their earnings after market hours on Friday and over the weekend.
Global Cues
The recent weakness in global markets amid dimming hopes that the US Fed will slash rates as early as in the first quarter of 2024, has weighed on domestic equities. Therefore, movement of global equities and any major developments will also be tracked by investors.
Market movement particularly in China and Taiwan will be tracked, as in a set-back to China, Taiwan ruling party’s presidential candidate Lai Ching-te won the elections.
Macro-economic Data
Early next week, investors globally will track consumer price inflation data in the UK as that will give cues on Bank of England’s future course of action on interest rates.
On Wednesday, the US Fed will release its Beige Book, which will indicate the central bank’s assessment of the economy.
Corporate News
Tata Consumer Products shares will be in focus on Monday as the company late Friday announced the acquisitions of Capital Foods and Organic Foods. Capital Foods is the owner of Ching’s Secret and Smith & Jones brands, and Organic India, backed by Fabindia, sells organic teas and health products.
Bharat Heavy Electricals is set to rally on Monday as the company has bagged a mega order worth Rs 15,000 crore from NLC India to set up a thermal power project.
FII Flows
Foreign portfolio investors’ trading behaviour will be crucial after they turned net sellers of equities in the last week.
FPIs net sold Indian equities worth Rs 2,477 crore in the secondary market last week, according to data on Stockedge. They had net bought shares worth Rs 4,436.05 crore in the week ended January 5.
“Since 2024 is expected to witness further declines in US interest rates, FPIs are likely to increase their purchases in 2024 too, particularly in the early months in the run up to the general elections,” said V.K. Vijayakumar, chief investment strategist at Geojit Financial Services.
Heavyweight Performance
Gains in the market last week was led by information technology and select banking stocks. Therefore, movement in these sectors will be important for sustenance of the upmove in Nifty 50.
The upmove in Nifty Bank will hinge upon HDFC Bank’s earnings, scheduled on Tuesday.
“The upcoming short covering rally in Bank Nifty index hinges on the results of HDFC Bank, given its substantial 30% weightage,” said Kunal Shah of LKP Securities.
HDFC Bank faces an immediate hurdle at Rs 1,680, where its 20-DMA is located. A decisive breakout above this level is crucial for accelerating momentum, Shah said.
IPO Watch
The primary market next week will see one mainboard IPO of Medi Assist Healthcare and 2 other SME offers.
Further, three listings, including that of Jyoti CNC Automation are scheduled in the week.
Medi Assist Healthcare will open for subscription on Monday and close on January 17. The company has fixed a price band of Rs 397-418 per share for its IPO, which is completely an offer for sale of 2.8 crore shares.
Technical Indicators
By ending comfortably above 21850 points on Friday, the Nifty has decisively broken the 21500-21850 range on the upside, according to technical analysts.
“Nifty has reclaimed its record high and looks set to test 22150 and then 22500 points. However, the pace of rise could be gradual due to the prevailing underperformance of banking stocks,” said Ajit Mishra, SVP – technical research at Religare Broking.
In case of any profit taking, the 21150-21500 zone would continue to act as strong support, he said.
Given the uncertain trajectory for banks, Mishra recommends focusing on other key sectors for stock selection.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)