Markets may see volatility next week, say experts; global trends, Q4 results, FII flows and derivatives expiry key factors to watch out

Global factors, ongoing earnings season, monthly derivative expiry, and trading activity of foreign institutional investors are expected to dictate the domestic market in the next week, several analysts said mentioning that the equity benchmarks may continue to witness volatility.

The volatility is expected to continue considering major economic data releases, the current earnings season, and the monthly expiry, Yesha Shah, Head of Research, Samco Securities said. “The FOMC minutes, US GDP growth rate forecasts, and initial jobless claims will influence global sentiment.”

 She further said that the data on India's foreign exchange reserves, which was in the headlines for falling to a one-year low, as well as the INR/USD movement, will be keenly monitored.

Markets will continue to remain bumpy, and investors should remain on the sidelines until a clear trend emerges, the research head at Samco Securities said while advising investors.

Ajit Mishra, VP Research Religare Broking expects choppiness to remain high due to the scheduled monthly expiry, besides, the monsoon-related updates will also be in focus.

In line with the prevailing trend, global factors viz. performance of global markets especially the US, China’s COVID update and Russia-Ukraine news will remain on participants’ radar, he added.

The market now is in the last leg of the earnings season and companies like Divis Laboratories, SAIL, Adani Ports, Grasim, Coal India, Zeel Entertainment, Gail, JSW Steel, will announce their numbers during the week, the VP research at Religare Broking said in his market next week comment.

Despite the rebound in the Indian markets, Shah feels that the market has not reached its bottom, since price patterns on the Nifty show that the uptrend has been significantly harmed. Similarly, a Head and Shoulder breakdown has been seen on the weekly chart of the S&P 500 index.

A short-term rebound cannot be ruled out and at this point it is unclear if the bounce will be a relief rally or the start of a fresh bullish surge, Shah further said, recommending traders keep a cautiously bullish stance for the coming week as long as the Nifty does not break below 15,700 levels.

Markets have been witnessing wild swings within the 15,700-16,400 range and currently trading closer to the upper band, Mishra said, suggesting participants should wait for a decisive close above 16,400 to change the bias.

Among the sectoral indices, defensive like FMCG and pharma looks poised to surge further while others may continue to trade mix, the analyst at Religare Broking said urging traders should align their positions accordingly and maintain positions on both sides. 

Markets ended 5-week losing streak and gained over 3 per cent amid excessive volatility. Both the Nifty and Sensex ended higher by 3.1 and 2.9 per cent to close at 16,266 and 54,326 levels, and most sectoral indices, barring IT, participated in the rebound and the broader indices gained 3-4 per cent.