Indian equities to be volatile for some more time as it eyes Q1FY23 earning season says brokerage – know key drivers of market

The volatility in the market is likely to continue for some more time before it concludes in a more concrete direction now the market is eyeing earnings season analysts at Axis Securities believe while quoting the July equity market outlook.

“The market performance may be range-bound in the near term, primarily owing to weaker global cues as the Indian market has shown a correlation of 90 per cent with the US markets year-on-year.”

Keeping this in view, the market is likely to follow the direction of the US market in the near term, the domestic brokerage firm said.

The Indian market performance exhibited resilience till October 2021 and drove the indices to higher levels. However, the Nifty has corrected by 15 per cent from the top (Since 18th October 2021) and both Mid and Small Cap indices have corrected by 20 and 19 per cent from their respective highs.

Jun 2022 was an eventful month led by the rise in volatility on account of weaker global cues such as higher inflation print in the US market, a rise in US 10-year bond yields, and a 75bps of a rate hike by the US Fed, the report said.

In line with Axis Securities' expectations, all central banks are focusing on controlling inflation by frontloading the rising rates in the next six months. Nonetheless, the way the sustainable demand scenario pans out in the near term needs to be keenly monitored.

However, the brokerage foresees inflation touching higher levels in the next couple of months, though we expect it would be followed by some moderation in the next one or two quarters.

Stating that earnings and macro data drive the fundamentals, Axis Securities believes macro factors continue to take the center stage; DIIs counterbalancing FII selling and maintained Nifty March 23 target of 18,400 levels.