This Week in a nutshell (10-14 Jan)

Technical talks

NIFTY opened the week on 10^th Jan at 17,913 and closed on 14^th Jan at 18,255. During the week, NIFTY added another 2.5% and ended up with a decent bullish candle on the weekly chart, suggesting the bulls are in no mood to give up. At the current juncture, on the weekly chart, the index has breached the 20-weekly moving average while the RSI is at 64.  Going ahead, for the bulls, 18,375-18,400 would be the immediate hurdle and on the flip side, 18,150 would be the support level. If the index succeeds to close below the same, the Nifty50 could retest 18,050-18,000 levels.

Among sectoral indices, Realty (+4.9%), PSU Banks (+4.1%), and Media (+3.3%) were the top gainers while this week while FMCG (-0.13%) was the only loser.

Weekly highlights

• The Indian Indices opened high as India Inc started the earnings season with a bang giving hopes to investors that the numbers will surprise positively.
• Amid weak global markets and rising COVID-19 cases, the domestic market displayed strong momentum on expectations of a healthy start to the earnings season. However, rising inflation and a worsening pandemic soured the mood on Dalal Street by the end of the week.
• The World Bank projected India’s GDP growth at 8.3% for FY22E and 8.7% for FY23E.
• The National Statistical Office released inflation data during the week. India’s headline retail inflation jumped to 5.59 percent in Dec-21. The latest Consumer Price Index (CPI) inflation print is 68 basis points higher than the Nov-21 level of 4.91 percent. It is the highest inflation has been since Jul-21 when it had also come in at 5.59 percent.
• Globally, bourses were muted at the start of the week as reports of record-high Eurozone inflation at 5% kept investors on edge. However, Fed’s testimony to Congress uplifted the sentiments of the investors going ahead.
• Fed Chair Jerome Powell acknowledged on Tuesday that high inflation has emerged as a serious threat to the Federal Reserve’s goal of helping put more Americans back to work and that the Fed will raise rates more than it now plans if needed to stem the surging prices.
• The U.S. stock indexes rose as the week progressed after data showed that while U.S. inflation was at its highest in decades.
• The consumer price index rose 0.5% in Dec-21 after advancing 0.8% in Nov-21. In addition to higher rents, consumers also paid more for food. Prices paid by U.S. consumers jumped 7 percent YoY in Dec-21. This shows that rising costs for food, rent, and other necessities are heightening the financial pressures on America’s households.
• The weekly jobless claims report from the Labor Department was published on Thursday showing the number of Americans filing new claims for unemployment benefits increased to an eight-week high in the first week of January amid raging COVID-19 infections.
• However, U.S. stocks closed mixed on Friday, but all three major indexes suffered weekly losses as the prospect of rising interest rates and weaker economic data cast some doubt on the strength of the recovery from the COVID-19 pandemic.
• The foreign institutional investors (FII) sold equities worth Rs 40,029 mn, while domestic institutional investors (DIIs) bought equities worth Rs 36,293 mn.

Things to watch out for next week

• Markets will react to the results of two heavyweights- HCL Technologies and HDFC Bank in early trade on Monday.
• Earnings will continue to influence the market mood. Rising COVID-19 cases and threats to further curb movement and businesses and rising inflation might also set the direction of the markets.

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