Week Ahead...

The market maintained northward journey for the second consecutive week ended January 3, though it failed to sustain all gains due to sell on rally strategy adopted by the participants tracking strong US dollar, high valuation, consistent FII outflow, weakening Indian rupee, and rising oil prices.

The Nifty 50 rose 0.8% during the week to 24,005, and the BSE Sensex climbed 0.67% to 79,223, while the Nifty Midcap and Smallcap 100 indices outperformed the benchmark indices, rising 1.67% and 1.48%, respectively.

In the coming week starting from January 6, the market sentiment may remain positive amid likely volatility, with focus on the December quarter earnings season, several data points from the US and FOMC meeting minutes. Further, the beginning of earnings season will increase stock-specific action.

All eyes will be on the December quarter (Q3FY24) earnings that will be kicked off by Tata Consultancy Services (January 9) and Avenue Supermarts (January 11) next week. Overall, the September 2024 quarter numbers were subdued, which was one of key reasons caused selling pressure in the market, hence the market participants will focus on sequential numbers.

Technically, the Nifty 50 continued upward journey for the second consecutive session, especially after formation of Bullish Harami kind of pattern formation (bullish reversal pattern) in the previous week, signalling positive trend, though there was High Wave kind of pattern formation last week, indicating indecision among buyers and sellers. Overall, the trend remains consolidative with a positive bias. If the index decisively surpasses and sustains 24,200-24,250 area, the rally towards 24,800-25,000 can't be ruled out, but below it, the rangebound action may sustain with crucial support of 23,700.

As per the derivative data, the Nifty 50 is likely to see a 23,700-24,500 range in the coming week, as the decisive breaching it on either side can give firm direction to the index.