Week Ahead

For the week ended January 5, the Nifty ended 0.1 percent lower at 21,710 while Sensex ended 0.3 percent lower at 72,026. Within sectors, Nifty Realty (up 7.8 percent) and Nifty Media (up 3.3 percent) were the top gainers while IT (down 1.9 percent) and Metal (down 1.3 percent) were top losers.

The broader market sustained its outperformance for the second straight week. Nifty Midcap 100 gained 2.5 percent while Nifty Smallcap 100 gained 1.9 percent.

The exuberance of the broader index may be tested if the December quarter earnings do not justify the valuation.

On a yearly basis, the Street expects profit growth to be strong for industrials, autos and cement but weak for BFSI, FMCG, IT, chemicals, consumer services.

According to BSE earnings calendar, about 65 companies are slated to release their results between Jan 8 to Jan 13. Among Nifty 50 companies, TCS (Jan 11), Infosys (Jan 11), HCL Tech (Jan 12), Wipro (Jan 12) and HDFC Life Insurance (Jan 12) will declare their December end results.

On the technical charts, Nifty is forming new higher highs daily, with identified support levels at 21,500 and 21,400. Immediate resistance is anticipated at 21,800 and 21,900 & if Nifty manages to sustain above the 21,800 mark, then 22,000 and 22,200 will be the next target levels.

Options data indicates that the 21,800 is expected to be an immediate resistance for the Nifty 50 as clearance of the same may possibly take the index beyond 22,000 mark, while the 21,700-21,500 is the crucial support area.