Markets may face volatility amid derivatives expiry, global factors to remain in focus: Analysts

Stock markets are likely to witness volatility this week amid monthly derivatives expiry, ongoing Russia-Ukraine conflict and high crude oil prices, analysts said. Geopolitical tensions and supply-side concerns would continue to dominate investor sentiment, they added.

"This week, we will have March month F&O expiry that may provide a direction to this range-bound market. Global equity markets are also rebounding and showing some signs of stabilization, however, there are still uncertainties about the Russia-Ukraine issue that may continue to cause volatility in global markets.

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"Crude oil prices have again inched higher amid geopolitical issues and supply-side concerns and if it sees further strength then it could be a cause of concern for the Indian equity markets," said Santosh Meena, Head of Research, Swastika Investmart Ltd.

According to market analysts, the scheduled monthly expiry of March month derivatives contracts would keep volatility high this week.

"Participants will also be eyeing auto sales data starting April 1. On the global front, updates on the Russia-Ukraine war and its impact on world markets and movement in crude will remain in focus," Ajit Mishra, VP Research, Religare Broking, said.

The market movement would also depend on the movement in rupee and investment pattern of foreign institutional investors (FIIs).

After two weeks of consecutive gains, benchmark indices Sensedx and Nifty declined by nearly 1 per cent amid no signs of de-escalation between Russia and Ukraine and hawkish statements by the US Fed.

Amongst the sectors, metal was the top gainer followed by IT and pharma. On the flip side, FMCG, banking and auto were the top losers.

Amid all, the broader indices outperformed as midcap and smallcap index ended higher 1 per cent and 0.2 per cent respectively.

The scheduled monthly expiry of March month derivatives contracts would keep the volatility high next week.

Besides, participants will also be eyeing the auto sales data starting April 1. On the global front, updates on the Russia-Ukraine war and its impact on world markets and movement in the crude will remain in focus.

Yesha Shah, Head of Equity Research, Samco Securities, said, "Back home volatility would be the main course of action as the last monthly expiry of this fiscal is scheduled this week."

Analysts added that markets are showing resilience amid uncertainty however deterioration in the global sentiment may again turn the bias.

"The domestic market will continue to follow global developments. An end to the war & rise in oil supply can help India to sustain its resilience or else high volatility will be a concern in the short-term," said Vinod Nair, Head of Research at Geojit Financial Services.

Milind Muchhala, Executive Director, Julius Baer, said, "The Indian equity markets continue to be in a grind, influenced by and reacting to incremental news flow on the global front, especially related to the geopolitical situation and Fed rhetoric. The two key challenges and monitorable for the markets in the near term are the persistent inflationary pressures and the rising bond yields."