Q3 earnings, FII flows, economic data to set market direction this week

Q3 earnings, FII flows, economic data to set market direction this week

MUMBAI: Benchmark equity indices are likely to consolidate this week as signs of fatigue have appeared among the bulls in the wake of the sharp rally in the past two weeks due to the pro-growth Union Budget announced on February 1.

In the futures segment, traders sold both the out-of-money call and put options of Nifty50 expiring on Thursday. This indicates that traders are indecisive over the direction the market can take in the near-term.

Analysts suggested that traders are wary of taking fresh positions which could result in lacklustre trading momentum this week.

That said, here are the factors that may have a bearing on the market this week:

FII inflows
With domestic institutional investors remaining net sellers in the market even after the Union Budget, much of the heavy lifting has been done by foreign investors. Market participants will keep an eye on foreign flows to gauge the market’s momentum.

December quarter earnings
The Q3 earnings season has entered its home stretch with a handful of Nifty50 companies left to announce their numbers. However, in the broader market there are still several companies that will report their earnings in the coming days.

CPI, IIP data
Investors will react to the better-than-expected industrial production data for December and Consumer Price Index-based inflation data for January, released after market hours on Friday. The sharp drop in retail inflation is likely to provide some comfort to investors, who have lately started expressing concerns over inflation.

FOMC meeting minutes
Investors will parse through the minutes of the US Federal Reserve’s previous monetary policy, which will be released on Thursday, to gauge the central bank’s thinking on inflation expectations, economic recovery and view on interest rates.

Technical outlook
Technical analysts believe that the market has entered the overbought zone in the short term and bulls are getting tired. “The market is now constrained within the immediate support and resistance of 14,970 and 15,250 and a break on either side will dictate the trend for the week,” said Nirali Shah of Samco Securities.

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