Stock markets to be guided by quarterly earnings, global trends in holiday-shortened week, say analysts

Analysts predict that stock markets in the upcoming holiday-shortened week will be influenced by quarterly earnings reports, global trends, and the trading activities of foreign investors.

January 22 will be a trading holiday due to the Maharashtra government declaring a holiday for the consecration of the Ram Temple in Ayodhya, and markets will also remain closed on Friday for Republic Day.

"The interest rate decisions of the BoJ (Bank of Japan) and ECB (European Central Bank), along with the US GDP data, are anticipated to drive the market dynamics," said Vinod Nair, Head of Research, Geojit Financial Services.

Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services Ltd, advised traders to remain cautious as the week is truncated due to holidays.

"This is a truncated trading week following a holiday on Monday and Friday. Traders should stay light as the earnings season will get into full swing, leading to largely stock-specific actions. Moreover, interest rate decisions by the BoJ and ECB are due this week, along with US GDP and PMI data, which would have an influence on the global rate cut trajectory," Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services Ltd, said.

Santosh Meena, Head of Research at Swastika Investmart Ltd, said that anticipations surrounding the upcoming budget and global attention towards Japan's monetary policy and US economic data will drive stock and sector-specific movements. The past week saw market volatility, with Nifty and Sensex experiencing a substantial decline, influenced by Bank Nifty's underperformance, particularly due to a significant drop in HDFC Bank's shares post-earnings.

The trading pattern of the global oil benchmark Brent crude and the rupee-dollar trend will also play a role in influencing market movements. Arvinder Singh Nanda, Senior Vice President at Master Capital Services, emphasised that the Q3 earnings season, along with domestic and global events, FII and DII investment patterns, and movements in the rupee and crude oil prices, will remain in focus during the week.

(With PTI inputs)