In the short term, investor focus is expected to gravitate towards the impending results season, with an optimistic outlook projecting double-digit earnings growth, according to Vinod Nair, Head of Research at Geojit Financial Services. Contrary to initial concerns about weak Q3 results in the IT sector, the sector exhibited resilience, surpassing expectations. The improved outlook for the Banking, Financial Services, and Insurance (BFSI) sector in FY25 has further buoyed domestic market sentiments.
The earlier enthusiasm surrounding potential early rate cuts by the US Federal Reserve has waned due to higher-than-expected US inflation and positive job data. This shift has tempered global market sentiments, introducing a note of caution.
Meanwhile, the escalation of the conflict in the Red Sea region has driven an increase in oil prices. Despite domestic inflation data for December slightly undershooting expectations, industrial production (IIP) witnessed a more significant deceleration than anticipated, contributing to the nuanced market landscape.
Looking ahead, Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services, highlights key factors influencing the market in the coming week. This includes a keen focus on Q3 results, India's inflation figures, and US Producer Price Index (PPI) data. Companies such as HDFC Bank, HUL, Ultratech, ICICI Bank, Asian Paints, and various mid-cap firms are set to announce their Q3 results. Consequently, market activity is expected to see a more stock-specific orientation. It's noteworthy that US markets will remain closed on Monday, contributing to potential fluctuations in global market dynamics.
(With Agency Inputs)
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