Market This Week: From Q3, Red Sea Conflict To Inflation Data, Here's What Will Influence Sentiments

Indian market will be influenced by a host of factors this week. From the onset of Q3 earnings season with major financial results of TCS and Infosys queued on January 11, to key inflation data of major economies of US, China, Japan and India. Further, investors will be eyeing global trends including the conflict in the Red Sea. In the trading sessions from January 1st to 5th, Sensex and Nifty witnessed a volatile week and ended broadly on a mixed note.

In the trading week from January 8th to 12th, it is expected that if Nifty slips below 21,500 this week, chances are it will reach to 20-DMA of 21,400. But if the benchmark surpasses the 21,800 mark, it has the potential to climb between 22,000 to 22,200.

Last week, mixed jobs and activity data dampened the mood in the global market. Domestic equities too ended on a mixed note with Sensex down by 150.13 points or 0.21%, and Nifty 50 edged up by 10.65 points or 0.05% in the overall trading week from January 1st to 5th.

In the previous session, Sensex ended at 72,026.15 up by 178.58 points or 0.25%, while Nifty 50 closed at 21,710.80, higher by 52.20 points or 0.24%.

Pravesh Gour, Senior Technical Analyst at Swastika Investmart said, the Indian stock market ended the week on a flat note with limited gains. The Nifty settled above the 21700 level. The broader market sustained its outperformance for the second straight week. Sensex rises 179 points to 72,026 and Nifty 52 points to 21,711. Midcap index gains 87 pts to 47,396 while Nifty Bank falls 37 pts to 48,159. Nifty realty recently breached 14-year highs, while financials continue to drag the market.

Further, Vinod Nair, Head of Research, at Geojit Financial Services highlighted that the week began strong with optimism about future rate cuts, easing global inflation, and softer bond yields. However, concerns over weak China and Eurozone manufacturing data, along with Red Sea tensions, led to a flat market close. Fed minutes added uncertainty around the delay in the future Fed's rate cut. Amidst global concerns and in anticipation of the muted upcoming earnings season, the IT and Auto sectors exhibited weaker performance throughout the week. Conversely, mid, and small-cap segments sustained their rally, buoyed by healthy retail inflows. Notably, the realty sector emerged as the top performer, propelled by expectations of robust demand and healthy housing loan disbursement data announced by banks.

In the current week, Gour pointed out that Mother Market (US Market) started with a 5-day losing streak, the longest in 15 months. Global markets are a little bit nervous because of valuations on technology stocks, US economic data, uncertainty over the FED's next move, and the Red Sea conflict. It is also focusing on US bond yields and the dollar index. Additionally, data like US CPI and unemployment claims will be announced on January 11, 2024. These factors will be closely monitored, as they have the potential to influence market sentiment.

On the domestic front, as per Gour, all eyes will be on the beginning of corporate performance for the third quarter of the current fiscal year (Q3 FY24), spanning from November to December. The anticipation is particularly high for India's IT giants. TCS and Infosys released their Q3 results on January 11th, followed by HCL Tech and Wipro on the 12th. Market participants will be keeping an eye on the movement of the rupee against the dollar and crude oil prices. Investments by foreign institutional investors (FIIs) and domestic institutional investors (DIIs) will also be monitored.

The Nifty is consolidating in the 21500-21800 range with intraday volatility. If it slips below 21500, then the 20-DMA of 21400 will be immediate support; only below this can we expect any meaningful profit booking. If it manages to sustain above the 21800 mark, then 22000 and 22200 will be the next target levels, Gour added.

Meanwhile, in the case of Banknifty, Gour said that the index is respecting its 20-DMA around the 47800 mark. On the upside, 48500-48800 is acting as an immediate supply zone; above this, we can expect a move towards the 49500-50000 level. If it slips below 20-DMA, then 47000 will be the key support level.

Lastly, Gour said, FII's long exposure in index futures remains at 67%, accompanied by a put-call ratio of 1.08, both indicating a neutral to positive market sentiment.

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