Week Ahead: Inflation data, Q3 Results, FII flow, crude oil, global cues among key market triggers for Sensex, Nifty | Stock Market News

The Indian stock market channelled through rough terrain to begin 2025 with a sharp sell-off amid its ongoing correction grip. The market logged a steep fall of over 2.4 per cent, marking the biggest weekly fall in nearly a month, dragged by a group of technical, domestic and global factors.

Investors will closely monitor key market triggers in the second week of 2025, including the next set of December quarter earnings for the current fiscal 2024-25 (Q3FY25), domestic and global macroeconomic data, US market, foreign fund outflows, crude oil prices and other global cues.

Domestic equity benchmarks Sensex and Nifty 50 snapped their two-week winning streak, extending the ongoing corrective phase. Weak quarterly earnings updates and growing concerns over HMPV virus cases in India dampened investor sentiment in the last five days.

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Although the frontline indices attempted to recover mid-week, late-session selling dragged the Nifty and Sensex to weekly lows of 23,431.5 and 77,378.91, respectively. Sustained foreign investor outflows, continued weakness in the Indian rupee against the US dollar, and the rising US 10-year bond yields also contributed to the sharp decline in the market.

On Friday, the indices nursed losses for the third consecutive session, in lockstep with a weak trend in global equities amid concerns over economic growth sapped risk appetite. The strengthening US dollar index and a sharp rebound in crude oil prices, raising inflationary concerns, further dampened sentiment.

On the weekly front, the BSE benchmark slumped 1,844.2 points or 2.32 per cent, and the Nifty dropped 573.25 points or 2.38 per cent. The BSE smallcap gauge dropped 2.40 per cent, and the midcap index declined 2.13 per cent. Most sectors came under significant pressure, with realty, energy, and metals being the hardest hit. 

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Twelve of the 13 major sectors logged weekly losses. The only outlier was the IT sector, which closed with a two per cent weekly gain after the sector leader indicated early signs of a demand revival. Broader, domestically focussed markets fared even worse, as midcap and smallcap indices fell sharply by 5.8 per cent-7.3 per cent. 

“The midcap index bore the brunt of the selling pressure, plummeting by a significant six per cent this week. This marked the steepest decline for the midcap index in over two months, reflecting heightened investor anxiety in the broader market,” said Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd.

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“The downward revision in growth estimates to 6.4 per cent for FY25 has shadowed the economy’s momentum. Persistent selling by foreign investors due to high valuations, especially in broader markets and global headwinds, has weighed heavily on markets. A glimmer of hope emerged as the initial set of results from the IT sector showed promise. Volatility is expected to remain as investors react to a mix of earnings, macroeconomic data, and global cues,” said Vinod Nair, Head of Research at Geojit Financial Services.

This week, the primary market will witness action as some new initial public offerings (IPO) and important listings are slated across the mainboard and small and medium enterprises (SME) segments. The week will be critical from the domestic and technical point of view as investors will track domestic and global economic data, along with quarterly corporate earnings.

Here are the key triggers for stock markets in the coming week:

Domestic macroeconomic data

Market attention is expected to turn towards macroeconomic indicators such as consumer price index (CPI)- based inflation and wholesale price index-based (WPI) inflation. Macroeconomic data will play a crucial role in shaping market direction this week. The RBI governor highlighted the critical need to manage inflation, suggesting that a potential easing of inflation and sluggish growth could create room for a rate cut in the next policy meeting.

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Q3 Results

Corporate earnings will be in the spotlight, with major companies, including IT giants, releasing their Q3 results. Investors eagerly await the release of Q3 earnings reports from major blue-chip companies this week.

Prominent names such as Infosys Ltd, L&T Tech, Reliance Industries, HCL Technologies, HDFC AMC, HDFC Life Insurance Company, Wipro, and Axis Bank are set to unveil their financial performance, which could significantly impact the market sentiment.

“Earnings announcements could present stock-specific opportunities. IT, FMCG, and select pharma sectors appear relatively resilient, while broader markets and other sectors will likely remain under pressure,” said Ajit Mishra – SVP, Research, Religare Broking Ltd.

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5 new IPOs, 8 listings to hit D-Street

Laxmi Dental IPO will open for subscription in the mainboard segment on January 13. In the SME segment, four new public issues are set to open for bidding this week. Among listings, shares of Standard Glass Lining Technology, Quadrant Future Tek, and Capital Infra Trust InvIT will debut on stock exchanges BSE and NSE. Shares of five SMEs will debut on either BSE SME or NSE SME.

FII Activity

In the domestic market, foreign institutional investors (FIIs) remained net sellers, offloading ₹16,854 crore in the cash segment. However, domestic institutional investors (DIIs) provided strong support, with net inflows of ₹21,682 crore, partially cushioning the market’s fall.

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Puneet Singhania, Director at Master Trust Group said the tug-of-war between FIIs and DIIs is unfolding, adding to the market’s dynamic. While FIIs have been offloading Indian equities recently, DIIs have been actively accumulating, creating a complex interplay of forces within the market.

Global Cues

On the global front, updates on the US economy, particularly labour market data and inflation trends, may impact FII flows. A spike in crude oil prices will add inflationary pressure. Analysts say the ongoing foreign fund outflows and cues from US markets are expected to impact the sentiment.

Oil Prices

International crude oil prices rallied nearly three per cent to hit their highest in three months in the previous session after commodity traders braced for supply disruptions from the broadest US sanctions package targeting Russian oil and gas revenue amid the ongoing military attacks on Ukraine.

Brent crude futures settled at $79.76 a barrel, up $2.84, or 3.7 per cent, after crossing $80 a barrel for the first time since October 7, 2024. US West Texas Intermediate (WTI) crude futures rose $2.65, or 3.6 per cent, to settle at $76.57 per barrel on January 10, 2025, which was also a three-month high.

Both crude contracts were up more than four per cent at their session high after European and Asian traders circulated an unverified document detailing the sanctions. Back home, crude oil futures last settled 3.14 per cent higher at ₹6,572 per barrel on the multi-commodity exchange (MCX).

Corporate Action

In the coming week, shares of software giant Tata Consultancy Services (TCS) and PCBL, among others, will trade ex-dividend. Shares of several other companies will also trade ex-bonus and ex-split. Check full list

Technical View

On the technical front, the Nifty 50 index is approaching its November 2024 low of 23,263.15. A continued downtrend, especially in the banking sector, could trigger a breakdown, with the next significant support at 22,700. 

“On the upside, the 23,850-24,200 zone is a challenging resistance area. The 47,300-48,200 zone for the banking index will be crucial for downside support, while 49,900-51,150 will be a strong resistance range. Traders are advised to remain cautious amid the prevailing volatility,” said Ajit Mishra of Religare Broking Ltd.

According to Mishra, strict risk management is essential for cash market positions, considering the steep correction in mid-caps and small-caps. A disciplined approach with well-defined stop losses will be crucial for effectively navigating the current market environment.

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Puneet Singhania of Master Trust Group believes Nifty is trading below its 21-week and daily EMA and slipped below the ascending trendline, signalling a bearish tone in the market. It currently rests at a crucial support zone of 23,200-23,300 horizontal band support, which has historically acted as strong support. 

“A breach below this level could trigger further selling, potentially dragging the index toward 22,900,” added Singhania. Pravesh Gour of Swastika Investmart Ltd believes a meaningful relief rally in the market is expected only if the Nifty 50 index sustains above the 23,900 level this week.

Bank Nifty plunged 2,254 points (-4.42 per cent), breaking its consolidation zone and closing below the 21-weekly and daily EMA, forming a bearish Marubozu on the weekly chart. The strong selling pressure indicates a shift in sentiment. According to Fibonacci retracement, the next support lies at 48,300, and a breach below this level could trigger a 1,000-point decline. 

“The index is now in a “sell-on-rise” trend, with any bounce near 49,100 offering a selling opportunity. Traders can place a stop-loss at 49,500 to manage risk effectively. The trend favours further downside unless it reclaims key resistance levels,” added Singhania.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.