Index Likely To Remain Volatile As Market Eyes Corporate Earnings

The NIFTY continued rising last week, making a fresh high even amidst the volatility, as the first phase of the US-China trade deal came into play, and higher than expected inflation data prints rolled in.

The WPI indicator rose to 2.59 per cent in December against a rise of 0.58 per cent in November, while retail inflation rose to a near five year high of 7.35 per cent against 5.54 per cent seen in November. Imports fell by 8.83 per cent to USD 38.61 billion, bringing down the trade deficit to USD 11.25 billion during the month.

The major corporate news was the blow to Vodafone Idea and Airtel due to the Supreme Court upholding its verdict on the AGR dues. Idea lost nearly a quarter of its share price on Friday, while Airtel surged by 5.47 per cent as market players speculated that the company would benefit from what may essentially become a duopoly in the country's beleaguered telecom sector. 

Technical indicators suggest that a further 40-60-point upside remains in the index, after which momentum correction may result in a drop of 200-400 points. On the options front, maximum call open interest is at 12500 and 12400 strikes, and maximum put open interest is at 12000 strikes. Small and midcap indices continued their impressive breakout and it is quite likely that a sizeable rally is on the cards for these segments in the months to come.

All eyes are on corporate earnings this week, with 18 biggies all set to declare their earnings for the December quarter, including HCL Technologies, L&T Finance Holdings, L&T Tech Services, RIL, and TCS among others. The broader trend continues to be mildly bullish, and short positions are not advisable.

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