Markets may face volatility amid key factors like derivatives expiry, Q4 results & global trends: Analysts

The Indian market is likely to face volatility in the next week on the back of monthly derivatives expiry, as well as the global trends and ongoing quarterly earnings by corporates would continue to play a major role in the trading movement, experts noted.

Markets would also keenly track foreign fund movement amid unabated outflows.

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We expect volatility to remain high in the coming week as well due to the scheduled expiry of April month derivatives contracts, Ajit Mishra, VP Research, Religare Broking said in his next week’s expectations from the equity market.

He added that the global cues like the Russia-Ukraine crisis, China’s COVID situation, and the performance of the global indices will continue to weigh on the sentiment.

On the earnings front, some prominent names like Bajaj Finance, Bajaj Auto, Axis Bank, Hindustan Unilever, Maruti, Ultratech Cement, and Wipro will announce their numbers during the week along with several others, the analyst at Religare Broking also said.

In line with Mishra, Santosh Meena, Head of Research, Swastika Investmart expected that this week will also kick off on a sombre note on the back of a sharp fall in the US market on Friday after hawkish commentary by the US Fed and weak earnings.

The global cues may dominate this week along with April month F&O expiry and Q4 earnings, Meena noted. He said, FIIs are continuously selling in the Indian equity market and their behaviour will be important amid concerns of aggressive rate hikes in the USA.

“Global cues are largely dictating the trend at present as the beginning of the earnings season has failed to impress the street so far. And, we believe traders would continue to face tough times due to excessive news flow, causing erratic swings in markets,” Mishra said in his expectations note.

There are still uncertainties about the Russia-Ukraine war whereas the market will also have an eye on crude oil prices, he said.

"The still persistent war situation in Eastern Europe, likely rate action from the ECB, and also an enhanced rate response from the Fed are factors that will guide the markets in the coming week, and may also put pressure on prices," Joseph Thomas, Head of Research, Emkay Wealth Management, said.

On the index front, the Nifty must defend 16,800 levels for any meaningful recovery else the tone would turn more bearish. In case of any rebound, it would face a hurdle around 17,450 and then 17,700 levels, Mishra said, suggesting to limit overnight leveraged trades and focusing more on themes that are showing consistency in their trends.

Last week, the Sensex lost 1,141.78 points or 1.95 per cent, while the Nifty shed 303.70 points or 1.73 per cent.

"Global cues like hawkish Fed commentary, rising inflation and bond yields, slowing economic growth, prolonged war in Ukraine and volatile crude prices are keeping markets uncertain. Continuous selling by FIIs and weak results by few heavyweights has further added pressure to the market," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Milind Muchhala, Executive Director, Julius Baer, said investors might prefer to wait out for more results to be announced and hear out the accompanying commentaries to gauge in case there are any concerns of earnings cuts creeping in.

"Also, the impending concerns of elevated commodity prices due to geopolitical situation and supply chain challenges, and with increasing expectations of a harsher hike by the US Fed, the market may continue to witness higher volatility in the near term," Muchhala added.

With PTI Inputs