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The week ahead: Results, macro data and rupee to dictate market trend

The week ahead: Results, macro data and rupee to dictate market trend

The week ahead should see markets react to start of results season, important IIP (index of industrial production) and rupee movement as the first week of 2014 saw the market succumb to heavy profit booking.

The year started on a weak note as the Indian equity market ended the first week of January with losses on back of disappointing data on the macroeconomic front. RBI's Financial Stability Report, which pointed out increase in risk in banks, disappointing fiscal deficit numbers and a decline in December manufacturing PMI dragged the benchmark Indices lower.

The nifty ended the week down 1.61 per cent while the high beta "Bank Nifty" lost 2.43 per cent. The outperformer was the CNX IT which ended the week with gains of 0.98 per cent.

The nifty closed at its 50 dma (day moving average) at 6211, it now finds support at 6129 and faces resistance at 6356. The bank nifty also closed at its critical 200 dma at 11181 and now finds support around 10800 while it faces resistance at 11445.

The week also saw globally most indices correct as low volumes and low participation kept the markets in check. The U.S Dow Jones ended the week down marginally 0.05 per cent, while the U.S 10 year bond yields closed at 2.98 per cent.

Gold prices bounced back sharply after seeing the worst yearly performance in almost 3 decades with the asset declining 29 per cent.

Infosys kicks of results season on10th January and will set the tone for the markets. The other worry for the market was the announcement of "freebies" on water & electricity charges being cut by the new political entrant in the capital the AAP (Aam Aadmi party).

This saw markets react negatively as any further pressure on the subsidy side will see the fiscal deficit widen & put pressure on the rupee.

The top 3 gainers on the Nifty were Ranbaxy up 3.2 per cent, Lupin up 3 per cent and TCS up 2.8 per cent. While the top 3 losers were M&M down 6.9 per cent, BPCL down 6.4 per cent and Tata Power down 6.2 per cent.

The week saw the return of the defensives as weak sentiment and rupee above 62 saw buying re-emerge in IT, pharma and FMCG, while selling was observed in rate sensitive's like banks, autos and infra.

The next week should see the nifty decide the near term trend as we see more participation and better volumes from the foreign investors who have been the driving force behind the markets.

Disclaimer: Sanjeev Bhasin is an independent market analyst. The opinions expressed here are the personal opinions of the author. NDTV is not responsible for the accuracy, completeness, suitability or validity of any information given here. All information is provided on an as-is basis. The information, facts or opinions appearing on the blog do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.