Markets to look to Q3 earnings for trends

Buoyed by positive global cues like US jobs data and domestic developments like approval of recapitalisation bonds to strengthen banks, the first week of 2018 saw the Sensex and the Nifty close at their lifetime highs. Sensex and Nifty ended 97 points and 28 points higher at 34,154 and 10,558 during the week ended. 

Renewed buying from FPIs kept the sentiment positive. The broader markets too were in exuberant mode with the BSE mid-and small-cap indices rising 0.69 per cent and 0.97 per cent. 

Expectations from Budget, which will be presented in the Parliament on February 1, may keep market volatile with stock specific action in the coming couple of weeks. Marketmen are wary of a populist Budget since this will be the last “full” Budget of the government ahead of next elections. 

Fundamental solid policy changes matter a lot to the direction of the economy and inflation and are therefore important for the markets. 

Crude oil prices crossed $68 a barrel level for the first time since May 2015 making it the key risk for country like India which imports more than 80 per cent of oil requirement.Observers feel that the crude can touch $70 and beyond that the risk will increase in terms of widening fiscal deficit. 

Near term direction of markets will be dictated by Q3 earnings, crude oil prices, expectations over Budget, macroeconomic data and global cues. For the week ahead, chartists predict trading range of 33,650 - 34,575 and 10,390-10,725 for the benchmark indices. Support for the indices evident at 33,850 & 33,650 and 10,475 & 10,400.