Markets may remain volatile next week amid Q2 earnings, October F&O expiry: Santosh Meena of Swastika Investmart

The Nifty and the Sensex witnessed profit booking after hitting their fresh all-time high of 18604 and 62245, respectively. However, the Nifty Bank is in a different mood and continuing its bullish momentum with a new all-time high of 40587.

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Santosh Meena, Head of Research, Swastika Investmart said: "There is a sectorial rotation visible, where some money is moving from stock with expensive valuations towards banking names as there is a comfort of valuation and strong earnings."

FMCG sector was the biggest dragger last week with a cut of more than 6% after earnings disappointment with HUL, Asian Paints, and Jubilant food.

He further added that as per the data, both foreign institutional investors (FIIs) and domestic institutional investors (DIIs) are in a selling mode. FIIs sold worth Rs 7,350 crore and DIIs sold worth Rs 4,505 crore in the cash market last week. FIIs' long exposure in the index future stands at 62%, while PCR is sitting at the 0.82 mark, which is an oversold territory and that may lead to a short-covering bounce in the market.

Technically, the Nifty formed a dark cloud cover candlestick formation on the weekly chart, which is a sign of a short-term reversal but we have to wait for follow-up for confirmation, Meena said.

On the daily chart, it is trading near the critical support zone of 18000-17950 zone, where a bounceback is expected. On the upside, 18250-18300 will be the immediate supply zone, while 18400-18450 will be the next resistance zone, he added.

If the Nifty slips below the 17950 level then there is a risk of any meaningful correction, where 17600 will be the next important support level.

"The Nifty Bank is outperforming, however, 40500 is an important hurdle because it coincides with upsloping trendline resistance on the monthly chart where some profit booking is expected but if it manages to sustain above this level then a further rally towards 41000/41500 levels is expected. On the downside, 39500-39300 is an immediate and strong support zone, below this, 38800-38500 will be the next important support area," he said.

 
Talking about the cues for the coming week, the next batch of earnings season and October month F&O expiry may cause volatility in the market. The market will react to earnings of Reliance industries and ICICI bank on Monday, while Tech Mahindra, Ambuja Cement, Axis Bank, Bajaj Finance, Cipla, Kotak Bank, Adani Ports, L&T, Bajaj Auto, ITC, Indusind Bank, Maruti Suzuki, SBI life insurance, Titan, DLF, Indigo, Tata Power, Dr Reddy's, GAIL, Vedanta, etc will come out with their earnings during the week, he added.  

The primary market will again become active as Nykaa's IPO is opening on 28th October. Other important cues are Institutional investors' behavior will be important as they are selling continuously for the last few days. Globally, prices of crude oil continue to rise, which is a concern for a market like India furthermore rising US bond yields may also disturb the mood of the global equity market, he asserted.

(Disclaimer: The views/suggestions/advices expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)