F&O Expiry | Market Analysis: F&O expiry, Q4 earnings among top 8 factors that may guide markets this week

Benchmark indices – BSE Sensex and Nifty50 – dropped about a per cent each. BSE midcap and smallcap indices settled with marginal cuts.

Vinod Nair, Head of Research at Geojit Financial Services, said: “Global markets have moved cautiously due to inflation data release, uncertainties of war development, volatile crude prices, hawkish FED policy and mixed quarter results.”

The domestic market has been volatile with hawkish RBI policy and negative start to Q4 result season by IT and mixed results by the banking sector. This has led to heavy selling in heavyweights by FIIs, he added.

In the upcoming week, markets will keenly watch the Q4 earnings of India Inc along with the expiry of April series derivatives. On the global front, war crises, crude oil and Covid-19 will be the major factors to watch out for.

Below are key factors that may steer markets next week:

April F&O expiry

The April Series derivatives series will expire on Thursday, which will lead to heightened volatility in the market as investors head towards the expiry more uncertain than last month. As traders rush to either square or rollover their positions, the market may react to them accordingly.

Q4 Earnings

The earnings sessions for the fourth quarter will gain momentum in the upcoming week as bluechips counters, including Bajaj Finance, HDFC Life, Hindustan Unilever, Bajaj Auto, Bajaj Finserv, Axis Bank, SBI Life, Wipro, Maruti Suzuki, Ultratech Cements will announce their numbers for March 2022 quarter.

Other key companies, including AU Small Finance Bank, Tata Investment Corporation, Mahindra CIE Automotive, Century Textiles & Industries, HDFC Asset Management Company, Trent, Vedanta and Ambuja Cements, are among other names to report their Q4 earnings.

Russia-Ukraine Crisis

The situation in the war-hit Ukraine and Russia remains tense, which is hurting the traders across the globe. Russian forces are trying to storm the Mariupol steel plant and some areas mark the heavy presence of armed forces along the border. Any news of de-escalation would be welcomed by the markets.

Inflation and bond yield

Inflation continues to rise across major economies. The US and UK have already reported record-high numbers.

India is also suffering the heat of rising prices. The boil in the crude oil is making other things more expensive. This has lifted benchmark bond yields, which is negative for emerging market equities.

Central banks across the world are worried about rising prices. Federal Reserve’s Chairman Jerome Powell has signalled a more than expected aggressive policy to combat the issue.

FII Outflows

The exodus of foreign investors from the Indian equity markets is hurting the sentiments. FPIs have been net sellers to the tune of Rs 15,867 crore in April so far. They have sold shares worth over Rs 1.32 lakh crore in 2022.

FII ownership of NSE 500 stocks hit a three-year low of 19.5 per cent, according to a BofA Securities note. BofA noted that this was the 6th consecutive month of outflows on geopolitical uncertainty and March saw FII outflows at $5.4 billion, which was the highest since March 2020.

Covid Crisis

The rising cases of Covid-19 in India and other countries is likely to be a serious threat for the global markets. The resurgence pandemic may again impose various sorts of restrictions in the various parts, which may dent the normalcy.

Two IPOs

Primary markets will be back in action next week as two issues — Campus Activewear and Rainbow Children’s Medicare — will be on Dalal Street. Both issues will close in the same week.

Campus Activewear’s Rs 1,400-crore IPO will be open for subscription between April 26-28 in a fixed price range of Rs Rs 278-292 apiece, whereas Rainbow Children’s issue will raise Rs 1,581 crore via offering between April 27-29 in the price band of Rs 516 to Rs 542 per equity share.

Technical Outlook

Nifty 50 ended the week on a flattish note. Though mid-week a sharp fall was witnessed, the benchmark quickly recouped and lost ground after re-testing the crucial support of 16,800, said Yesha Shah, Head of Equity Research, Samco Securities.

“While the benchmark is likely to remain range-bound between 16,800 to 18,100 levels, traders are advised to go into the next week with a bullish bias. However, a decisive break below the 16,800 level will negate the bullish view and may result in short-term weakness,” she added.