Key Stock Market Triggers for week starting 9th Jan, 23

As we enter a week where the all-important inflation and IIP numbers would be out, there are several triggers to watch out for. Here is a quick summary of the triggers that could impact stock markets during the week starting on 09th January 2023.

1. Nifty had a hard fall in the last 3 days of the week and ended the week -1.36% lower as it saw pressure from IT and financials. The pressure was largely triggered by a more than hawkish tone of the Fed. The impact on mid-caps and small caps was less severe; falling -0.28% and -0.77% respectively. Expect shift to more of alpha drive stock specific buying.
    

2. The results season starts this week in right earnest. Among the major large cap results to set the overall trend this week would be TCS, Infosys, Wipro, HDFC Bank, D-Mart and HCL Technologies. There are also a number of early birds among the smaller companies declaring results this week. These include Cyient, Den Networks, L&T Finance and Aditya Birla Money.
    

3. It will be a week of two important inflation numbers this week. The India CPI inflation would be announced on Thursday 12th January. Last month, inflation had fallen sharply to 5.88%, but December could see CPI inflation bounce back to 6.4%. However, US inflation is likely to fall further from 7.1% in November 2022 to around 6.8% in December 2022. This is likely to be assisted by falling food prices in the US.
    

4. While inflation flow will be a mixed bag this week, what about growthy. The IIP (index of industrial production) had dipped to -4% in October and that is expected back to around the neutral levels in the November month. This bounce was already signalled by the bounce in core sector this month, which constitutes nearly 40.27% of the IIP basket. However, barring the base effect, manufacturing is likely to be under pressure.
    

5. Post the Fed minutes, Fed selling has intensified and that is likely to continue this week too. In the first week of January 2023, FPIs sold Rs5,872 crore worth of equities and were also sellers in debt. Over the last 11 days, FPI sold Rs14,300 crore of equities. The weak FPI trend will continue this week. To add to the problems, this is a week with no mainboard IPOs and just one small IPO of Sah Polymers listing on the bourses.
    

6. Weak Brent crude in this week is likely to be supportive of a strong rupee. Last week, Brent fell below the $80/bbl mark with rising concerns over the global economy slowing. That is not great news for oil demand and that has been showing signs of weakening. The Russian sanctions has not really impacted oil prices in a very big way. The USDINR closed the week strong at Rs82.23/$ and rupee looks set to gravitate towards the 82/$ levels in the coming week. However, weak demand is likely to spook oil prices.
    

7. On the technical charts, the level of 18,000 and then 17,800 would be crucial supports for the market. If the Nifty really falls below 17,500 mark, then the undertone of the markets could change drastically. On the upside, 18,300 continues to be the resistance for the Nifty followed by 18,500. For now, the chances of the Nifty going beyond that level looks quite thin, at least with the current global macro headwinds.
    

8. How does the VIX and the F&O data look like. Firstly, the VIX or the volatility index has shown a bounce in the last one week, hinting at a build-up of pre-budget volatility. Secondly, if you look at the call and put accumulation data on the Nifty, then a range of 17,500 on the downside and 18,000 on the upside looks the most likely to range. That broadly also ratifies what the technical charts are also indicating about the markets.
    

9. Finally, there are some major data points on the global front. Let us first look at the US data cues for the week. These include Wholesale inventories, API crude stocks, inflation, initial jobless claims and MBA Mortgage Applications. In addition to the US markets, there are also key data triggers for other major financial markets like the EU, UK, China and Japan. Key data points include EU unemployment, IIP, Trade; Japan Household spend, current account, bank lending, China PPI, inflation, trade