Liquidity flows, as well as positive sentiments on the back of better-than-expected quarterly results and the government's recent reform measures, have the potential to lift the key Indian equity indices higher during the upcoming truncated weekly trade, analysts opined.
However, macro-economic inflation data along with the recent sovereign rating action by an international agency might cap the extent of the overall rise.
"While Nifty50 valuation at 22xFY20 is not cheap, it can overshoot in the near term on the back of liquidity flows and positive sentiments," Motilal Oswal Financial Services' Retail Research Head Siddhartha Khemka told IANS.
"We expect the participation in Mid-caps to increase going forward given their significant underperformance over the last 12 months."
Companies announcing quarterly results
Next week, companies like Adani Ports, Coal India, Hindalco, India Cements, Indian Hotels, Bharat Heavy Electricals, Mphasis, SpiceJet, GMR Infra, ONGC, SAIL, Vedanta and Vodafone Idea amongst others are expected to announce their quarterly results.
Besides Q2 results, investors will lookout for the upcoming macro-economic data points such as the IIP (Index of Industrial Production).
The National Statistical Office (NSO) is slated to release the macro-economic data points of IIP and CPI on November 11. These will be followed by the release of Wholesale Price Index (WPI) and Balance of Trade data.
According to Vinod Nair, Head of Research at Geojit Financial Services: "Trend of the market will be dictated by macro releases. India's CPI inflation is expected to be on the higher side at 4.3 per cent due to rise in vegetable prices as per consensus estimates."
"Despite the festive season the IIP is expected to decline to 2.3 per cent as per estimates. Both the data released is expected to put pressure on rate-sensitive stocks. However global concerns related to trade war has eased and the same could provide comfort for investors."
On the currency front, the rupee is expected to be volatile due to the recent ratings action and the dynamics of US-China trade negotiations said Edelweiss Securities' Head of Forex and Rates Sajal Gupta.
"INR closed at 71.29 weakening on back of outlook downgrade on India's rating from 'Neutral to Negative'," Gupta said.
"Also RBI reserves swelled to $446 billion which is the highest to date... accumulation of US dollar is seen around 70.60 to 70.70 levels. Expect rupee to be under pressure in the range of 71.10 to 71.80."
On technical levels, the National Stock Exchange's Nifty50 has entered into a correction phase which might continue next week.
"Technically, with the Nifty displaying a 'doji' pattern on weekly charts in the fifth week of upmove, the index seems to have run into a correction which could continue in the truncated week ahead," said Deepak Jasani, Head of Retail Research for HDFC Securities.
"On a fall below 11,850, Nifty could fall to 11,685 and 11,490 sequentially. On upsides, 12,034-12,103 band could provide resistance."