Market ahead: Q3 results, Red Sea crisis, inflation, FII activity among key

The Indian stock market witnessed a flat closing in the week ended on Friday, January 5. The upcoming trading week, is poised to be influenced by several factors, including the commencement of the third-quarter earnings season, inflation data, and other specific triggers affecting individual stocks.

On Friday, Key equity indices the Sensex and the Nifty 50 ended with gains for the second consecutive session. Sensex finally closed the day 179 points, or 0.25 per cent, higher at 72,026.15. Meanwhile, Nifty50 settled at 21,710.80, up 52 points, or 0.24 per cent.

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The broader market continued to demonstrate strong performance for the second consecutive week, with the Nifty Midcap 100 recording a gain of 2.5 percent and the Nifty Smallcap 100 showing a 1.9 percent increase. Nevertheless, analysts caution investors to exercise prudence in light of the upcoming results season and ongoing uncertainties in the Red Sea region.

“The market ended on a flat note, tracking weak global cues, with the US 10-year yield edging higher ahead of the release of US payroll data later today, which may shape the expectation for the Fed policy. Investors are also staying cautious ahead of eurozone inflation data today. On the domestic front, the market is moving towards the results season, and we expect the exuberance of the broader index may be tested if the December quarter earnings do not justify the valuation,” said Vinod Nair, Head of Research, Geojit Financial Services.

Also read: Bajaj Auto, Chambal Fertilisers to consider buyback of shares next week

Here are key market triggers for stock market in the coming week –

Q3 result season

As per the BSE earnings calendar, approximately 65 companies are scheduled to unveil their results from January 8 to January 13. Among the Nifty 50 companies, TCS (January 11), Infosys (January 11), HCL Tech (January 12), Wipro (January 12), and HDFC Life Insurance (January 12) are set to announce their financial results for the end of December.

Also read: Tata Steel Q3 update: Crude steel production stood at 5.32 million tons, up 6%

Analysts at Elara Securities anticipate subdued performances from the IT firms, projecting an average constant currency (CC) growth of 1.4-1.6 percent in dollar terms. This muted sequential growth in the December quarter is attributed to prolonged higher inflation, delays in discretionary projects, and overall sluggish growth. The October-December period is traditionally a slower quarter, influenced by the holiday season in the US and European countries, which serve as the major markets for Indian IT firms.

Red Sea crisis

The crisis persists unabated, with Houthi rebels persistently targeting commercial ships in the Red Sea amid the escalating Israel-Hamas conflict. Maersk, a shipping giant, has already announced the rerouting of all vessels away from the Red Sea for the foreseeable future, cautioning customers about potential disruptions.

As the Red Sea crisis intensifies, there are concerns about its impact on trade. A report from the economic think tank GTRI on January 6 suggested that it could lead to a potential increase of up to 60 percent in shipping costs and a 20 percent rise in insurance premiums. In response to this escalating situation, Indian government officials convened with shipping companies last week to evaluate the potential implications.

IPOs next week

Jyoti CNC Automation will be the first mainboard initial public offering (IPO) to hit Dalal Street in 2024. The issue will open for subscription on January 9 and close on January 11.

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