Inflation data, Q3 results to drive equities

Retail inflation data for December is scheduled to be released on Monday and wholesale inflation would be out on Tuesday. The data gains significance as off late there has been major price rise impacting common man's budget and also leading to a status quo on repo rate by the Reserve Bank of India (RBI).

Retail inflation or the Consumer Price Index (CPI) in November surged to 5.54 per cent from 4.62 per cent in October on the back of a massive rise in food prices.

"Investors will closely watch CPI data, consensus is showing inflation to spike further to 6.7 per cent in December due to oil prices and vegetable prices," said Vinod Nair, Head of Research at Geojit Financial Services.

The coming week would witness quarterly results for the October-December period by several major corporates, which will be a significant factor for the investors.

"Corporate results for Q3FY20 will be keenly watched out for. Some prominent companies coming out with results include Wipro, HCL Technologies, HDFC Bank etc," said Deepak Jasani of HDFC Securities.

Among the geopolitical factors, the easing tensions between the US and Iran and the signing of the first phase of the US-China trade pact in the upcoming week would be a major support for both global and domestic investor sentiments.

Jasani noted that the phase-I of the US-China trade deal to be signed on January 15 will bring in some details about the deal from both sides.

According to Nair, the global risk has reduced in 2020 with likely trade deal between US and China, Brexit and in anticipation of improvement in the world economy.

Edelweiss Professional Investor Research's Chief Market Strategist Sahil Kapoor observed that mid and small cap segments have begun to outperform the large caps suggesting that market breadth is now favouring a larger uptrend.

On the technical front, Jasani said that the for Nifty50 may reach fresh record levels it if breaches the immediate resistance of 12,311 points and crucial support is seen around 12,213-12,118 points.

On Friday, the Nifty50 on the National Stock Exchange (NSE) touched an all-time high of 12,311.20 points, before settling at 12,256.80, higher by 40.90 points or 0.33 per cent from its previous close.

The BSE Sensex closed at 41,599.72, higher by 147.37 points or 0.36 per cent from the previous close of 41,452.35 points.