Week Ahead

During the week gone by, the Nifty 50 rose 184 points to 21,895, and the BSE Sensex jumped 542 points to 72,568, while the Nifty Midcap 100 and Smallcap 100 indices underperformed benchmarks, rising 0.25 percent and 0.7 percent respectively.

The key focus next week will be on the domestic corporate earnings season, especially after the solid start by technology companies last week. Nearly 200 companies will be releasing their December quarter numbers during the coming week with a major focus on Reliance Industries, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Hindustan Unilever, Asian Paints, LTIMindtree, IndusInd Bank, UltraTech Cement, and Jio Financial Services.

On the economic data front, India's monthly wholesale inflation, as measured by the Wholesale Price Index, for December will be released on January 15. We expect the WPI inflation to increase further, against it was at 0.26 percent for November, the highest point in eight months.

Passenger vehicle sales and balance of trade data for December will also be announced on the same date, while foreign exchange reserves will be released on January 19.

FIIs have net sold Rs 3,900 crore worth of shares in the week ended January 12 and for the current month, their net selling was a little more than Rs 600 crore in the cash segment.

While DII were also net sellers for the month to the tune of Rs 438 crore, but for the passing week, they made strong buying of Rs 6,858 crore in the cash segment helping the market to hit a new high.

Technically Nifty 50 finally has seen a breakout of a downward sloping resistance trendline at 21,750, triggering a new high of 21,928, with continuing higher highs, and higher lows for the second consecutive session. For the week, the index has seen bullish candlestick formation with long lower shadows and continued higher highs for seven weeks in a row.

Nifty successfully breached the 21,800 resistance level, with 22,000 acting as a psychological hurdle and 22,220 identified as the next target level. On the downside, the 21,750–21,650 range constitutes the immediate demand zone, with 21,500 serving as a key support level.