Q3 earnings & vaccine roadmap among key factors that may guide market this week

Q3 earnings & vaccine roadmap among key factors that may guide market this week

MUMBAI: The week gone by was another spectacular one for the Indian market, with benchmark Nifty crossing the psychologically-important 14,000-mark for the first time, and the benchmark equity indices logging their longest winning streak in a decade.

Benchmark Sensex surged 895.44 points, or 1.91 per cent, to 47,868.98 points in the week, while peer Nifty advanced 269.25 points, or 1.96 per cent, to 14,018.50.

The coming week will see the start of the corporate earnings season, and provide an early view of the quarterly report cards. The roadmap for distribution of Covid-19 vaccine will also be a key factor the market will watch out for.

Here are key factors that may drive the market during the week:

Q3 earnings season: Top software exporter Tata Consultancy Earnings (TCS) is set to unveil its December quarter earnings on January 8, and will kick start the earnings season. A few smaller companies are also set to detail their quarterly report cards in the week.

Vaccine distribution roadmap: The dry run to test preparedness of the Covid-19 vaccination drive kickstarted on January 2. Health Minister Harsh Vardhan said vaccine will be provided free to most prioritized beneficiaries, including one crore health workers and two crore frontline workers.

Coronavirus updates: Investors will closely watch the pace of new Covid-19 infections in the country. On Sunday, India recorded 18,177 fresh cases of coronavirus in a span of 24 hours, taking the total number of positive cases in the country to 1,03,23,965. Meanwhile, India has successfully cultured the new coronavirus strain, which originated in the UK, the Indian Council of Medical Research (ICMR) said on Saturday.

FII flows: Inflows from foreign institutional investors (FIIs) have been crucial in driving the market higher in the recent sharp rally. FIIs were net buyers in the equity segment last week, with gross purchases of Rs 24,099.89 crore and gross sales of Rs 18,110.96 crore, leading to a net inflow of Rs 5,988.93 crore.

Georgia elections: The control of the US Senate will be decided by two runoff elections in Georgia this week and Democrats need to win both races to control the upper house of Congress while Republicans need to win just one. The election is scheduled to take place on January 5.

Domestic data: On the economic front, traders will be eyeing macro data starting with Markit Manufacturing PMI scheduled to be released on January 4. The IHS Markit India Manufacturing PMI declined to 56.3 in November from 58.9 in October. This was the lowest reading in three months, but the latest reading was still consistent with a sharp rate of expansion, amid ongoing loosening of COVID-19 restrictions.

On January 6, traders will also watch out for Markit Services PMI for the month of December. The IHS Markit India Services PMI decreased to 53.7 in November 2020 from 54.1 in the previous month. Also, foreign exchange reserves data will be announced on January 8. Forex reserves in India increased to $5,81,130 million on December 18 from $5,78,570 million in the previous week.

Global data: On the global front, investors will keep an eye on macro-economic reports from world’s largest economy, United States, starting with Markit Manufacturing PMI on January 4, followed by Redbook on January 5, Markit Composite PMI, Factory Orders on January 6, Balance of Trade, Jobless Claims, Import & Export on January 7 and Wholesale Inventories and Baker Hughes Oil Rig Count on January 8.

Technical outlook: According to Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities, Nifty has formed a breakout continuation formation and the texture of the chart suggests an uptrend is likely to continue in the near term.

“We can expect further upside activity towards the 14,300 or 14,400 levels. On the downside, Nifty would find big support between 13,800 and 13,700,” said Chouhan.

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