Key inflation data and the ongoing quarterly earnings season are expected to determine the movement of equity indices in the week starting January 14, say experts. The sharp deceleration in the rate of growth in the country's industrial output is also expected have an impact on investor sentiment. Additionally, global cues such as concerns over the rise in crude oil prices and trade talks between the US and China, along with the direction of foreign fund flows, will affect the risk-taking appetite of investors, they add.
"Going forward, the market will closely watch guidance and management commentary of the companies coming out with their earnings," DK Aggarwal, CMD, SMC Investments & Advisors, told news agency IANS.
"Besides, third quarter results, macroeconomic data, trend in global markets, investment by foreign portfolio investors (FPIs) and domestic institutional investors (DIIs), the movement of rupee against the dollar and crude oil price movement will dictate the trend of the market going forward."
In the coming week, companies such as Reliance Industries, Cyient, Hindustan Unilever, Rallis India, ICICI Securities, Multi Commodity Exchange of India, Mindtree, SBI Life Insurance Company and Wipro are expected to announce their earnings for the quarter ended December 31.
According to Sahil Kapoor, chief market strategist, Edelweiss Investment Research: "The breadth of the market suggests that the underlying strength of the broader market is still absent. NSE500 Index which is much broader than the Nifty is still trading below its 200DMA."
"As we move into the thick of the result season the index is likely to see a break of this trading range. If the index were to trade below 10,700 mark a fall towards 10,400 to 10,500 range is likely and a retest of 2018 lows would also rise in probability."
Apart from the Q3 results, investors will look out for the upcoming macroeconomic data such as CPI (Consumer Price Index), Wholesale Price Index (WPI) and Balance of Trade.
The Central Statistics Office (CSO) is slated to release the macroeconomic data of CPI (Consumer Price Index) on Jan 14.
Besides, a volatile rupee against the US dollar might hamper market's northward moves.
"The rupee has got concerns from rising crude and risk of fiscal slippage in poll bound nation... any breach above 70.60 levels can take it to 71.50 levels. On the lower side 69.80 can be seen if any softness in crude is seen," said Sajal Gupta, head of forex and rates, Edelweiss Securities.
"Any positive development on resolution of global trade concerns can be a positive backdrop for rupee to appreciate in coming week."
On a weekly basis, the rupee weakened by 77 paise to 70.49 against the dollar.
In addition, direction of foreign fund flows will be the another major theme for the equity market.
According to provisional data released by stock exchanges, FIIs remained net sellers to the tune of over Rs 500 crore during the week ended January 11.
Last week, the key equity indices -- the Sensex and Nifty -- rose despite a rise in global crude oil prices and heavy outflow of foreign funds, partly owing to an ease in liquidity and hopes of the US-China trade war being resolved.
Consequently, the Sensex gained 314.74 points, or 0.88 per cent, to close at 36,009.84 points. Similarly, the Nifty closed trade at 10,331.60 points -- up 67.6 points, or 0.63 per cent, to settle at 10,794.95.