Macro-data to drive equities, Q3 results to give directions

Macro-economic data points along with expectations of healthy quarterly results and developments surrounding the rollout of anti-Covid vaccine are expected to give further imputes to the current market rally.

However, observers cited that even volatility on account of profit booking will likely trigger in bottom fishing, thereby reigniting the up move.

"The results season began on Friday with TCS coming out with excellent Q3FY21 numbers. As more companies come out with their numbers, the focus could shift from index to individual stocks and peer stocks," said Deepak Jasani, Head of Retail Research at HDFC Securities.

"There is still no reversal signal for the index. Another two odd weeks of gains seem plausible though not at the same pace."

The week ahead will be heavily influenced by Q3FY21 corporate earnings as companies like HCL Tech, PVR, HDFC Bank, Wipro and Infosys are expected to announce their quarterly results.

"The focus of the Indian markets have currently shifted to third quarter earnings. Healthy business figures reported by banking and auto sectors have led to a better quarterly outlook which is likely to continue in the coming week keeping the sectors in the limelight," said Vinod Nair, Head of Research at Geogit Financial Services.

Apart from the healthy Q3 results, the Central Statistics Office (CSO) is slated to release the macro-economic data points of Index of Industrial Production (IIP), Consumer Price Index (CPI) on January 12.

Besides, investors will look forward to the macro-economic data points of WPI (Wholesale Price Index) and India's trade figures.

"Next week a lot of macro data will be out including India's Inflation, loan growth and Industrial output," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.

"As the long term market structure remains positive, we would advise investors to adopt Buying on Dips strategy to accumulate quality stocks."

In addition, the volumes of foreign fund flows will be the other major sentiment driver.

The trade week ended on January 8, witnessed an inflow of foreign funds as FIIs were net buyers to the tune of over Rs 9,600 crore.

According to Joseph Thomas, Head of Research, Emkay Wealth Management, "The market draws its strength from the relatively better economic fundamentals, resulting from the easy liquidity conditions and the accommodative stance of fiscal and monetary policy."

"Any challenges to the sustainability of the economic rebound would pose a problem for the markets."

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