Fourth quarter results, global indices, other factors to watch

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The Indian stock market lost nearly 2% amid high volatility, with the Sensex down 1,141.78 points, or 1.95%, at 57,197.15 and the Nifty closing 303.65 points, or 1.73%, down to 17,172 in the week ended April 22. Warmongering comments from the US Federal Reserve on May’s rate hike, rising bond yields, mixed quarterly numbers and worsening Russia-Ukraine war led the market to close in the red.

Santosh Meena, Head of Research at Swastika Investmart Ltd., said: “This was the second week of declines for the Indian stock market due to weak global signals, IT name earnings disappointment and pain. HDFC twins. Next week is also expected to start on a gloomy note following a sharp drop in the US market on Friday after hawkish comments from the US Fed and weak earnings. Global indices could dominate next week with April F&O expiry and fourth quarter earnings. In terms of fourth quarter results, the market will react to the results of ICICI Bank on Monday while Bajaj Finance, HDFC Life, Bajaj Auto, HUL, Ambuja Cement, Axis Bank, Bajaj Finserv, Vedanta, Indusind bank, Maruti Suzuki, Ultratech cement and Wipro will have other key results that are expected next week.

On a sector basis, the Nifty information technology index lost 5.6% and the Nifty media index 4%. The Nifty PSU bank and Nifty bank indices lost 4% each. The Nifty Auto Index, however, added 3%, Nifty Energy and Oil & Gas rose 2.4% each.

Global indices

Vinod Nair, Head of Research at Geojit Financial Services, said: “Global markets moved cautiously amid inflation data releases, wartime development uncertainties, volatile crude prices, FED’s hawkish policy and mixed quarterly results.”

FII Sale
FIIs are continuously selling in the Indian stock market and their behavior will be important amid fears of aggressive rate hikes in the US. Uncertainties remain over the Russian-Ukrainian war as the market will also have an eye on crude oil prices. If we look at the derivative data, the put-call ratio stands at the 0.91 level while FII’s long exposure to index futures stands at 47%, with both heading towards the zone of oversold.

Clever technical insights

In terms of OI distribution, the highest OI on the sell side is at the 17,000 mark, below that we can expect more selling pressure. On the upside, open interest for call options is evenly split between 17,200 and 17,500.
Technically, Nifty has a sacrosanct support level of 16,800, below that Nifty is vulnerable to a major drop, but 16,600 is also another support level as the 61.8% retracement of the previous rally. On the upside, 100-DMA of 17,300 is an immediate and strong hurdle while 20-DMA of 17,450 is the next critical hurdle.
Banknifty is likely to drop a psychological support level of 36,000 while 35,000 is the next critical support level. On the upside, 36,500-37,000 is a critical supply zone.

What should investors’ strategy be this week?

“Traders are advised not to trade aggressively until the trend becomes clear and, unlike previous weeks, we also don’t have a compelling idea on individual stocks. So we have to be selective. when it comes to an equity-centric approach and following strict stop losses for momentum betting,” said Sameet Chavan, Lead Analyst – Technical and Derivatives, Angel One.

Disclaimer: The views and investment advice of the experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before making any investment decision.

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