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What will guide the markets sentiment in the next few days?

Equity markets are beginning to turn volatile as profit-making at higher levels is capping the upsides. Let's look at the key events that will guide the sentiment and trading strategies for investors

Indian equity market | market sentiments | Investment strategies

Nikita Vashisht  |  New Delhi 

Equity have kick-started the calendar year 2022 in a buoyant mood. Despite the lingering Omicron threat, which is sweeping across economies globally, world stocks managed to end the previous week in the positive zone. Bulls took charge with renewed zest last week, but some trepidation was observed in the mid-week as interpreted the Fed’s hawkish policy minutes. Given this, benchmark indices staged an over 1.5 per cent rally last week, with the BSE Sensex and the Nifty50 parked at 59,745 and 17,813 levels, respectively. In the broader markets, the BSE MidCap and SmallCap indices gained about 2 per cent and 1.5 per cent, respectively. That said, market moves may be slightly erratic from here on as quarterly results begin to pour in. Over 40 companies will report their December quarterly figures this week, including IT majors TCS, Infosys and HCL Tech, and banking giant HDFC Bank. In recent weeks, Indian IT stocks have outpaced the benchmark, fuelled by expectations of an increase in deals and a resultant stellar growth momentum. Thus, margin projection, revenue guidance and attrition figures will be monitored during the earnings announcement. As regards banks, green shoots have appeared, with 10 out of 13 banks reporting double-digit loan growth as per the Q3FY22 business update. This has raised expectations of earnings momentum of Q2FY22 continuing in Q3FY22. That said, in light of recent developments surrounding the Omicron variant of Covid, it will be crucial to monitor management commentary on growth outlook and risk perspective. On the economic front retail inflation data for the month of December and Industrial Production data for November will be released on Wednesday, Jan 12. The wholesale inflation print, meanwhile, will be announced on Friday, Jan 14.

Separately, investors will also react to the GDP data released last Friday. According to the first advance estimate, the government expects India’s GDP to grow at 9.2% in FY22, as against a 7.3% contraction in FY21. This, however, is below the 9.5% projection by both RBI and IMF. Against this backdrop, Yesha Shah, Head- Equity Research at Samco Securities, spells out trading strategy for the week. Overall, as are likely to consolidate further after the recent surge amid mixed global cues and spurt in Covid-19 cases, investors should continue with a positive yet cautious approach and prefer hedged positions. Meanwhile, tech charts suggest the benchmarks may attempt to reach near their all-time high levels this week. The 50-pack index may reclaim the 18,000-mark and could maneuver in the range of 17,400 to 18,400. The Sensex index, on the other hand, may trade between 58,500 and 60,950, with stiff resistance placed around 60,500 level.

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First Published: Mon, January 10 2022. 08:00 IST