Inflation data, Q3 earnings, FII trading to drive mkts this week: Analysts

Investors will take cues from the December quarter corporate earnings, with blue-chips like Infosys, Reliance Industries scheduled to report their results this week, in addition, inflation data and trading activity of foreign investors will also be crucial in dictating market trends, analysts said.

Movement of crude oil prices and the dollar index will also be tracked by investors. The strengthening of the US dollar, along with rising US bond yields, impacted investors' confidence last week.

"The Indian equity markets are poised for a volatile week ahead, as investors eagerly await the release of Q3 earning reports from major companies.

"Prominent names such as Infosys, Reliance Industries, HCL Technologies, HDFC AMC, HDFC Life Insurance Company, and Axis Bank are set to unveil their financial performance, which is likely to significantly impact market sentiment," Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd, said.

Adding to the market's dynamic, a tug-of-war between Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) continues to unfold, he said.

"India's CPI release on Monday will be a key factor," Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services Ltd, said.

WPI inflation data is scheduled to be announced on Tuesday.

Last week, the BSE benchmark slumped 1,844.2 points or 2.32 per cent, and the Nifty dropped 573.25 points or 2.38 per cent.

"The sharp decline in the market is attributed to multiple factors, including sustained foreign fund outflows, subdued expectations for Q3 earnings, continued weakness in the Indian rupee against the US dollar, and rising US 10-year bond yields.

"Additionally, a strengthening dollar index and a sharp rebound in crude oil prices, raising inflationary concerns, further dampened investor sentiment," Puneet Singhania, Director at Master Trust Group, said.

India's industrial production (IIP) growth accelerated to a six-month high of 5.2 per cent year-on-year in November 2024, riding on the increased festive demand and pick up in the manufacturing sector, according to the official data released on Friday.

"Looking ahead, corporate earnings will be in the spotlight, with major companies, including IT giants, releasing their Q3 results. Macroeconomic data, such as India's inflation rate will also play a crucial role in shaping market direction.

"On the global front, updates on the US economy, particularly labour market data and inflation trends, may impact FII flows. A spike in crude oil prices will add inflationary pressure. Overall, market volatility is expected to remain as investors react to a mix of earnings, macroeconomic data, and global cues," Vinod Nair, Head of Research, Geojit? Financial Services, said.