D-Street week ahead: Earnings, macro data, COVID-19 likely to impact market

Quarterly results, macroeconomic data, and updates on the new variants of COVID-19 will be in focus on Dalal Street this week. Financial stocks will also be in the spotlight ahead of HDFC Bank's earnings due in the coming weekend, after the Nifty Bank clocked its best weekly performance since May 2021.

Foreign fund flow will remain in the spotlight. Foreign institutional investors (FIIs) have emerged net buyers of Indian equities in the past few days after three straight months of outflows.

Last week, the Sensex and Nifty50 clocked a third straight weekly gain, led by gains in financial and oil & gas stocks though losses in healthcare and IT shares played spoilsport. The Nifty Bank surged 6.4 percent -- its biggest weekly gain since May 2021.

"Earnings will dictate the market trend now and participants are hopeful of an encouraging start by IT heavyweights. Although the market is currently overlooking the rise in COVID cases, the extension of strict restrictions imposed by several states might dent the sentiment," said Ajit Mishra, VP Research at Religare Broking.

"The recent rise in COVID cases has prompted a few key states to announce restrictions and that may extend if the situation deteriorates further. On the positive side, the banking pack has regained some strength, which may help the Nifty test the 17,500 zone," he said.

Mishra expects banking, pharmaceutical, IT and FMCG stocks to outshine others on Dalal Street this week.

Both the Nifty50 and the Bank Nifty seem to be facing mild resistance at current levels, according to Yesha Shah, Head of Equity Research, Samco Securities. However, she said, the underlying bullish momentum remains intact as long as the Nifty holds 17,550.

"We suggest traders to maintain a cautiously bullish outlook, as a fall below 17,750 can lead to the index retesting previous support at 16,850," she added.

Mishra expects support for the Nifty around 17,400-17,600 levels and resistance in the 18,000-18,200 zone. "We reiterate our positive yet cautious view and suggest focusing more on risk management as volatility is likely to remain high," he said.

Tata Consultancy Services (TCS), Infosys and Wipro will release their quarterly numbers on Wednesday.

Mindtree will report its earnings on Thursday, and HCL Technologies on the next day.

HDFC Bank earnings are due on Saturday, January 15.

Separate data on industrial production and consumer inflation in the country are due on Wednesday.

Data on wholesale inflation will be out on Friday. Trade numbers are also due on this day.

Foreign institutional investors net purchased Indian equities worth Rs 3,202.1 crore ($430.5 million) in the first trading week of 2022.

Data on auto sales and wholesale inflation in the world's largest economy are due on Monday.

Data on inflation is due on Wednesday.

Retail sales numbers are due on Friday. Findings of a consumer sentiment survey will also be released on the same day.

The United Kingdom and Germany will release their GDP numbers on Friday. The UK will also release industrial production data.

Data on inflation in China is due on Wednesday. The country's trade data is due on Friday.