How shall markets perform in last week of 2022? Know what triggers would influence Indian equities – analysts explain

Market This Week, Market In Last Week of 2022: The volatility in the domestic markets is likely to continue, led by the global trends and the coronavirus situation in China during the last week of 2022 as that of previous week, several analysts said in their expectations.

They believe other factors such as December month derivatives expiry, foreign investors flow, rupee and crude oil movement may also influence the market this week. The market in the earlier week had been subdued and was dragged by multiple headwinds, including Covid-19 concerns, as per many analysts.

The scheduled derivatives expiry of December month contracts would keep the participants busy. Besides, the performance of the global indices amid the rising fear of COVID cases will further add to the volatility, Ajit Mishra, VP - Technical Research, Religare Broking Ltd said in his expectations.

"COVID case count in China and concerns about possible recession will continue to influence the global equity market in the near term," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd.

Similarly, Vinod Nair, Head of Research at Geojit Financial Services, said the market volatility is expected to persist as investors closely track mounting COVID cases in China.

"COVID worry has become an excuse for a sell-off, and its related news will continue to impact the direction of the market. Apart from that, crude oil prices and rupee movement will be other important factors," said Santosh Meena, Head of Research, Swastika Investmart Ltd.

Movement of the rupee, Brent crude oil and foreign fund trading activity would also be watched by investors during the week.

The benchmark indices, Sensex and Nifty, settled around the week’s low to close at 59,845.2 and 17,806.80 levels. The selling pressure was widespread wherein media, realty, metal and energy ended with a sharp cut and lost in the range of 5-9 per cent.

The broader indices, midcap and smallcap, also witnessed a severe fall and engulfed the gains of the last several weeks. The coming week will mark the end of the calendar year and participants will be eyeing core sector data and current account deficit on December 30. Before that,

Technical Outlook

Short Term technical setup of Indian benchmark indices has turned bearish and it would be better to stay away from catching a falling knife, Apurva Sheth, Head of Market Perspectives, Samco Securities said.

“Technically, Nifty has formed a lower top lower bottom on the daily chart, which is a bearish sign for the short term. Index on the daily chart has closed below its 9 & 21 – day exponential moving average and RSI on the other hand has drifted below 40 levels with a bearish crossover,” Sheth said.

On the daily chart, India VIX has witnessed a breakout of a falling wedge pattern above 14 levels indicating a higher expectation of volatility. The immediate support for the Index is placed around 17700 levels followed by 17400 levels and resistance is capped at 18200 levels. We would wait on the sidelines and not commit to fresh longs yet.