Stock markets started the New Year on a positive note as the Nifty gained nearly half a percent amid mixed cues. In the first three sessions, participants were in a cautious mood, citing several local issues like possible delay in the GST implementation, contraction in core sector data & services data etc. However, sentiment finally improved in the last two days, tracking reports on a rise in FDI, recovery in the rupee against the dollar and participation of the banking pack in the rebound.
In the coming week, participants will first react to the advance GDP estimates, which came in at 7.1%, indicating probable slowing down of economy in comparison to last year. “It’s important to note that the estimates largely incorporated data of constituents till October, missing the impact on economy after demonetisation. We feel the actual figure could be different, considering the dent which industries are going through due to cash crunch and we might see further downward revision ahead,” says Jayant Manglik, President, Retail Distribution, Religare Securities Ltd.
You may also like to watch
The coming week will mark the beginning of the third quarter earnings season. IT major Infosys will kick start the season, followed by other prominent names like Indusind Bank, MCX, and Gruh Finance. Also, on the economy front, Index of industrial production data & CPI inflation will be released on January 12.
The swift rally of the previous week is likely to see some amount of profit booking early next week. Markets around the world have started to correct the previous moves. US Treasury yields have started to fall dramatically and correspondingly precious metals too have bounced backed sharply. Similar movement is expected to continue for some more time.
Sugar prices have again started their upward ascent after a long and deep correction in the International Commodity Exchanges, which will have positive effects on the India-listed sugar stocks. Dollar Index has started to retreat, easing pressure on emerging market currencies which is very positive for countries like India.
Considering the list of events and data, traders should prepare themselves for a volatile week. Though the present bias is on the positive side, but a lot depends on the upcoming earning season ahead. Technically, “Nifty has reached to its immediate hurdle of 8300 and breakout above that mark will trigger further rebound, otherwise consolidation will set in again. We suggest traders to closely watch the earning announcements and maintain stock- specific trading approach,” suggests Manglik.
“Beginning Monday, global fund managers will be back, which will drive the market’s direction in the short term. Traders should therefore book profit at higher levels and re-enter at lower levels. Investors should keep on accumulating quality stocks in their portfolio,” says Jimeet Modi, CEO, SAMCO Securities.