The Week Ahead: Stock market in correction mode

The stock market is expected to react to a host of corporate earnings along with key inflation data slated for this week.

After seeing a smart rally in the previous two weeks, the key indices wrapped up the week ended January 11 in the negative zone.

In the week gone by, volatility ruled the markets on account of November IIP data, HSBC manufacturing figure, domestic car sales and the third-quarter result of Infosys.

Markets closed in the negative territory in four of the five trading sessions last week, thanks to selling pressure across-the-board.

Foreign institutional investors (FIIs) remained buyers of Indian stocks during the week. The BSE mid-cap index fell 2.15 per cent while the BSE small-cap index declined 2.11 per cent. Both the indices underperformed the Bombay Stock Exchange's benchmark index Sensex.

The 50-stock Nifty ended the week down 1.07 per cent, while the high-beta Bank Nifty lost 1.33 per cent during the week.

Globally, markets closed near 20-month highs and look set be continue the rally with risk-on trade, as Euro has risen to its highest level at 1.32 to the US dollar, bond yields on most European Countries are near one-year lows and the S&P 500 index within a striking distance of a five-year high. Also, oil and gold continued to trade range-bound during the week, while other base commodities saw some weakness.

Technically, the Nifty faces resistance at 6,020-30, while support comes at 5,930, which is the 20 DMA (day moving average). A close below this figure could see Nifty retrace to 5,860-70.

Bank Nifty faces resistance at 12,900 and support comes at 12,475.