Q1 results, IIP data to steer direction of markets next week

NSE Nifty's underlying trend remains bullish with immediate resistance level seen at 10,138 points

The ongoing quarterly results season, along with macroeconomic industrial production and exim data points are expected to steer the key equity indices during the upcoming week, market observers opined.

According to analysts, global cues, combined with the direction of foreign funds' flow and the rupee's movement against the US dollar will also affect investor sentiments.

"With the RBI (Reserve Bank of India) monetary policy out of the way, markets next week will continue to be influenced by global stocks hitting new highs, especially in the US, domestic earnings (actual versus consensus) and local inflows," Devendra Nevgi, Chief Executive of Zyfin Advisors, told IANS.

"The wide consensus is that markets will get support in the event of any correction, which so far has been eluding the markets. The fear is that there is no fear.

"FPIs (Foreign Portfolio Investors) have been net sellers in the current month. Profit-booking would keep the market's rise capped. The INR appreciation could also negatively impact earnings of some sectors," he said.

Further, market participants are expected to track quarterly earning results of sector-based majors like Tata Steel, Adani Power, Bharat Forge, Tata Chemicals, BHEL, Gail, Motherson Sumi Systems, Tata Motors and Power Finance.

"Due to the ongoing earnings season, stock-specific action would remain high, but most of the index participants are showing diminishing strength," Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.

"Despite the fact that Nifty has held on to the 10,000 points-mark, bank's stocks have given-up their recent gains. Bank Nifty is under pressure post the RBI rate-cut."

Apart from quarterly results, macroeconomic data points like the Index of Industrial Production (IIP) and the country's trade deficit or exim data will be keenly watched by investors.

"The July PMI was disappointing, IIP has been very volatile and growth of eight core industries is at a low level while India's GDP growth is off the track. We continue to have a cautious view in the near-term given premium valuation and strong price performance in the last 6-9 months," said Vinod Nair, Head of Research, Geojit Financial Services.

On technical levels, the NSE Nifty's underlying trend remains bullish with an immediate resistance level seen at 10,138 points.

"Technically, the underlying trend remains up and the coming week could see Nifty's attempt to reach new life highs," Deepak Jasani, Head, Retail Research, HDFC Securities, told IANS.

"Immediate resistances are at 10,138 points, while crucial supports to watch for any weakness are at 9,988 points."

Last week, key equity indices extended gains for the fifth consecutive week and scaled new record highs on the back of healthy quarterly earnings, as well as auto results, coupled with positive global cues. Nevertheless, gains were capped due to profit bookings.

Consequently, the 30-scrip Sensitive Index (Sensex) of the BSE closed at 32,325.41 points -- up more than 15 points or 0.05 per cent from its previous week's close.

In contrast, the NSE Nifty rose by 99.25 points or 1 per cent to close the week's trade at 10,066.40 points.