Jan and Feb are traditionally good months for the Indian markets. The start of the year may see some fresh upside in the market, and this has always been the case in the previous years.
The Sensex this week closed with gains of 1 per cent while the Nifty also rallied 1 per cent. Benchmark indices closed at a 2-month high on sustained buying by domestic institutions.
Markets are likely to get excited ahead of the Union Budget and corporate earnings. The key however going forward would be the earning season that pans out. Infosys will kick-start the result season on Jan 14. While the company is expected to perform well, as it has not sounded any warning on growth and revenue front.
Global cues would play an important role for the markets, particularly as the holiday season ends and trading for the new year will begin in most markets on Jan 4. Closely watched this week would be the movement of crude oil. Any further dips could drag global markets and Indian markets lower.
Also, towards the end of the week the US jobs number would assume paramount importance. Strong data would mean further hikes from the US Federal Reserve in the months to come, which would not be good for Indian markets.
All in all, we may see further upside in the Indian markets this week. How the markets behave in the subsequent week would largely depend on corporate results.