Economic data, earnings to drive market this week
The stock market this week would be driven by key economic data, corporate earnings and global developments. Analysts expect the market to remain volatile given pessimism over global growth and trade disputes. They said retail inflation and wholesale inflation numbers for January, due this week, will set the tone for the market. Recently, the RBI cut its repo rate by 25 basis points considering the benign inflation level. Lower fuel prices eased India's retail inflation in December to 2.19 per cent from the annual rate of
2.33 per cent in November. The annual rate of inflation, based on monthly Wholesale Price Index, stood at 3.80 per cent for December compared to
4.64 per cent for November.
“WPI Inflation is expected to remain subdued around
3.70 per cent. The industrial output, which nosedived to 0.5 per cent previously, is expected to come with improved numbers and any disappointment can give a jolt to the market,” said Mustafa Nadeem, CEO, Epic Research.
A key data closely watched by investors is the Index Industrial Production (IIP) for December, which will be released on Tuesday. A dismal IIP data for the past two consecutive months had caused nervousness in the market. “A fall in interest rates and improving outlook for consumption-oriented sectors after the interim budget will provide support to the market,” Vinod Nair, head of research, Geojit Financial Services, said. “On the global front, pessimism over growth and trade disputes may lead to volatility,” he added.
Earnings numbers from companies like Coal India, Hindalco, Eicher Motors, ONGC and Sun Pharma will be closely watched by the market. of According to technical analysts, Friday's losses indicated a downside momentum for Nifty on technical charts. “Nifty forms a shooting star as false breakout traps the bulls on the upside and ended down with marginal gains. A shooting star is a reversal pattern which is characterised as a small body with an upper shadow twice the range of the body that indicates weakness at higher levels and a possible impending reversal,” said Nadeem of Epic Research.
“A Doji star followed by a falling window on a daily scale has seriously put some dent on the charged bulls,” he further said. Derivatives data, which saw a huge change on the RBI event, has turned upside down and has hinted a cautious stance for any trader seeking a directional move. Short built-up is seen on higher strikes of 11,100-11,200, making it a resistance too hard to break in February series while lower strikes have seen some long build-up. This is a classic trap for the bulls. It is very much not a trending market as it has been oscillating in a very short range between 10,600 and 11,000.
Technical View