• Going forward, IT earnings out of the way, investors will now shift their focus to financial earnings, which is expected to be released over the weekend.
In the coming week, Indian markets are expected to focus on banking, financial and other key earnings for Q3FY23. During the week of January 9 to 13, the benchmark Sensex and Nifty 50 witnessed consolidation with earnings of major IT companies, selling by FIIs and key inflation data weighing on its overall sentiment. On the other hand, the rupee posted its best weekly performance in two months.
On Friday, the Sensex closed at 60,261.18, up 303.15 points or 0.51%. The Nifty 50 jumped 98.40 points or 0.55%. Metal and PSU bank stocks were the top gainers, while financial, private banks and media stocks also contributed to the rally.
The week from January 9 to January 13 started on a strong note on Monday, however, the markets witnessed three consecutive days of deep selling before closing on a positive note on Friday. Both Sensex and Nifty 50 have gained around 0.5-0.6% for the week.
However, foreign institutional investors (FIIs) remained net sellers throughout the week. Between January 9-13, FIIs sold ₹9,605.64 crore in Indian equities.
Meanwhile, domestic institutional investors (DIIs) remained buyers of Indian stocks worth ₹10,042.08 crore during the week ended January 13.
The Indian rupee on Friday closed at a one-month high of 81.3250 against the US dollar. The local unit however rose nearly 1.7% on the week - its biggest weekly performance since November 11.
Talking about the performance for the week ended January 13, Ajit Mishra, VP - Technical Research, Religare Broking said, "Market remained in a consolidation mood for one more week and ended with modest gains. The opening was positive , but tracked favorable global cues. Gains faded in the following sessions citing mixed cues. A correction in the last session helped the index to end higher, supported by favorable macroeconomic data and earnings in IT majors. Thanks for coming back. Finally, the benchmark indices, Nifty and Sensex, closed at 17,956.60 and 60,261.18 levels. In the sectoral pack, IT, Metal and Auto posted strong gains while defensive ones viz FMCG and Pharma trade declined. Meanwhile, Broader indices underperformed the benchmarks and closed marginally lower.
According to Shrikant Chauhan, head of equity research (retail), Kotak Securities, Indian equity markets remain concerned about growth prospects even as inflation continues to slide down globally and domestically.
Meanwhile, Vinod Nair, head of research at Geojit Financial Services, pointed out that positive triggers such as a reduction in inflation numbers and strong third quarter results forecast by another set of IT companies enthused the domestic market to close the week on a positive note. India's retail inflation eased to 5.7% in December, remaining within the RBI's tolerance band of 2-6% due to lower food prices. Similarly, the US inflation number eased to 6.5%, bolstering conditions that the Fed would adopt a less aggressive tightening policy. US wage growth is slowing, service activity is contracting, and December payrolls are rising more than anticipated, raising the prospect of a soft landing for the US economy.
However, Nair also said that the cautious growth forecasts of IT majors have put an end to the optimism. Continued selling by FIIs throughout the week on account of premium valuations in the domestic market also weighed on the overall market momentum.
What to expect in the Indian markets between January 16 and January 20?
Going forward, Nair said that with IT earnings out, investors will now turn their attention to financial earnings, which are expected to be released over the weekend.
Similarly, Religare's Mishra said earnings and global cues would largely decide the trend. On the macroeconomic front, we have WPI inflation data scheduled for January 16. On the earnings front, banking stocks will largely be in focus. First, the markets will react to HDFC Bank's numbers. In the next session, participants will be eyeing the results of IndusInd Bank, Kotak Bank and ICICI Bank. Besides this, prominent names from other sectors such as Hindustan Unilever, Asian Paints, UltraTech Cement and JSW Steel will also declare their results along with many others.
IndusInd Bank will announce its Q3 results on January 18, followed by Asian Paints, and HUL earnings on January 19. JSW Steel and Reliance Industries will announce their Q3 results on January 20. ICICI Bank and Kotak Bank are set to present their financial results on January. 21.
Besides, Mishra said, "Recent price action shows movement in Nifty around 17,800 levels and a decisive close above 18,100 will ease some pressure. Among the sectoral pack, the metal looks strongest."
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