Q3FY17 earning & Macroeconomic data to dictate market sentiments

Weekly Market Quote - Vijay Singhania, Founder-Director, Trade Smart Online, a leading discount brokerage firm.

December 2016 quarterly earnings from blue-chip companies and key macroeconomic data release are the big triggers for the markets in the coming week. We are now entering continuous news flow from now like earnings season, budget. If news follows through is positive, we will see a continuation of the on-going rally. But if the news gets negative, then we may see some correction taking place.

But broad market sentiments have started improving as the effect of demonetisation has been priced in. Investors are now looking beyond demonetisation and started factoring in new growth trigger expected in the forthcoming Union Budget, which has been advanced to February 1. Overall, liquidity in the market seems to be strong and technically the market structure also seems to have improved significantly with key resistance levels being priced and support levels not being violated. Directionally, we feel it's a sideways market with some positive upward bias and a lot of news flow is expected over the next three-four weeks, which may impact sentiment.

Blue-corporates which will commence announcing their Q3FY17 earnings from the next week include IndusInd Bank, TCS and Infosys. However, the markets will first react to outcome of the crucial US non-farm payrolls data for December 2016 and advance gross domestic product (GDP) data released by the government after market hours on last Friday.

Other macroeconomic data release during week includes the release the index of industrial production (IIP) data for November 2016 on Thursday. Industrial production in India went down 1.9 per cent year-on-year in October 2016, following 0.7 per cent growth in the previous period.

The government will also announce monthly inflation data based on consumer price index (CPI) for December 2016 on Thursday. Consumer prices in India increased 3.63 per cent year-on-year in November 2016, following 4.2 per cent rise in October 2016.

On the global front, Asian stock markets including Indian equities will on Monday, 9 January 2017, react to the outcome of the crucial US non-farm payrolls data for December 2016 due later in the global day on Friday, 6 January 2017.

If Nifty sustains above 8240 level then traders could expect positive move in the Nifty towards 8,280 followed by 8,320 level. If Nifty trades below 8240 level on Monday then traders may see down move, which could take Nifty to 8180 level followed by 8100 level.

Keep a watch on auto, banking, pharma and power sectors in the coming week on the long side. And technology and telecom stock on the short side.

Source : Equity Bulls

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