The stock market has seen a largely volatile trend in the past few trading sessions, swinging between gains and losses. Dalal Street is getting ready for another week of trading with several global and domestic factors expected to influence investor sentiment.
Corporate earnings and key economic data from around the world will likely shape the direction of equities, keeping investors on their toes.
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The week will begin with China’s NBS Composite PMI for January on Monday, which will provide insights into the health of China’s manufacturing and non-manufacturing sectors. On Tuesday, the US Durable Goods Orders for December will indicate consumer spending patterns. Japan’s Consumer Confidence Index for January is scheduled to be released on Wednesday, offering a glimpse into consumer sentiment in the country.
The US Federal Reserve will announce its interest rate decision on Thursday, January 30, which is widely expected to remain at 4.5%. Alongside this, the US GDP growth rate for the fourth quarter, forecasted at 3.1%, will provide a clearer picture of the country’s economic performance. On Friday, January 31, the U.S. Core PCE Price Index for December, a measure of consumer price changes, will be released, along with the UK Nationwide Housing Price Index, which reflects trends in UK house prices.
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“The interplay of rising inflation, global price trends, and corporate performance will be crucial for market participants. Robust performances from these corporate heavyweights could catalyze positive investor sentiment, while any earnings misses may exacerbate market volatility,” said Puneet Singhania, Director at Master Trust Group.
The stock market continued its losing streak last week, marking the third consecutive week of declines
Both the Nifty and Sensex breached key psychological levels of 23,000 and 76,000, respectively, before recovering slightly. Despite the modest recovery, the indices ended the week with losses of approximately 0.50%.
“All major indices are now trading below their crucial 200-day EMA, underscoring sustained bearish momentum. FIIs have remained consistent net sellers, with outflows exceeding â¹69,000 crore in the cash segment so far this month,” said Singhania.
Corporate earnings have added to the market’s volatility, with lacklustre third-quarter results from some of the largest companies failing to provide the boost investors had hoped for.
Foreign Institutional Investors (FIIs) remained net sellers, with outflows exceeding Rs 69,000 crore in January. However, Domestic Institutional Investors (DIIs) stepped in, providing net inflows of Rs 17,577 crore, which helped mitigate some of the impact of FII selling.
Alternative asset classes, such as Bitcoin and gold, reached record highs last week, drawing attention and funds away from equities. On a positive note, crude oil prices declined, and the Indian rupee strengthened slightly, offering some support to investor sentiment.
The Nifty index ended the week with a 0.48% decline, its third straight weekly loss. The index is now trading below key support levels, including the horizontal zone, the ascending trendline, and the 21-day, 55-week, and 200-day EMAs, confirming a bearish trend. The resistance zone at 23,350–23,450 continues to act as a barrier, with strong selling pressure observed at these levels. On the downside, the market may target 22,850 and 22,600 if the bearish trend persists.
“A ‘sell on rise’ strategy is advisable until the index sustains above 23,450. However, a breach above 24,450 could indicate a potential recovery toward 23,750,” said Singhania.
He further said that Bank Nifty followed a similar trend, closing lower for the third consecutive week. It is trading below its horizontal support zone and moving averages, including the 21-day EMA and 55-week EMA.
“The resistance zone at 48,900–49,000 remains a key hurdle, and a breakout above this level could push the index to 49,700. On the downside, support is placed at 47,900, and a breach below this could result in further losses, with 47,200 being the next target,” said Singhania.
Global trends will be a critical factor in determining market direction next week. Economic data from the U.S., China, Japan, and the UK will offer insights into global economic conditions and their impact on Indian markets. The continued selling by FIIs and the ability of DIIs to absorb the selling pressure will also play a significant role.
In addition, corporate earnings results from major companies will be closely watched, as they could either lift investor sentiment or deepen the bearish outlook.