Week Ahead

In the holiday-shortened week gone by, the BSE Sensex and Nifty 50 declined 1 percent each to end at 70,700 and 21,352, respectively. Amid mixed Q3 earnings, continued FII selling, interim Budget and the first FOMC meeting in store for the coming week, the benchmark indices are likely to see a tough battle between bulls and bears.

The broader market is unable to hold gains as the concerns of high valuations, subpar results, and persisting geopolitical tension in the Middle East, are weighing down the market.

During the week, FIIs sold equities worth Rs 12,194.38 crore, while Domestic institutional investors (DIIs) provided some support as they bought equities worth Rs 9,701.96 crore. In January so far, the FIIs sold equities worth Rs 35,778.08 crore, and DIIs purchased equities worth Rs 19,976.66 crore.

Since the tug of war between the FIIs and DIIs continues, volatility will remain high in the near-term.

Technically the trend is likely to remain sideways, fluctuating within the range of 21,300 and 21,500. Nevertheless, a decisive breakthrough above 21,500 could propel the index towards 21,700/22,000 in the short term.

As per the options data, 21,300 seems to be the critical area to watch for the trend on either side in the coming week and 21,400 is expected to be an immediate hurdle for the Nifty 50, while 21,200 and 21,000 may act as support zones.