The equity market is likely to begin the week on a negative note amid weak global cues.
The SGX Nifty at around 16,900, down over 200 points from Nifty Futures Friday close indicates a gap down opening for the market. On the global front, the US markets ended the week in the red while Asian markets were also trading weak during the morning trade.
Analysts expect volatility to remain this week ahead of the scheduled expiry of April month derivatives contracts.
According to Ajit Mishra, VP - Research, Religare Broking Ltd, "The slide in the Nifty index has faded hopes for a directional move and we may see further consolidation ahead."
Markets will react to the ICICI Bank numbers in early trade today, as per Mishra.
The country’s second-largest private lender ICICI Bank reported a 59.4 per cent jump in its standalone net profit to ₹7,018.71 crore in the fourth quarter of fiscal 2021-22, led by a sharp growth in net interest income and lower provisions. This is its highest ever quarterly net profit.
Volatility to remain high this week
"We expect volatility to remain high in the coming week as well due to the scheduled expiry of April month derivatives contracts. Besides, global cues like the Russia-Ukraine crisis, China’s Covid situation, and the performance of the global indices will continue to weigh on the sentiment," Mishra said.
"Global cues are largely dictating the trend at present as the beginning of the earnings season has failed to impress the street so far. And, we believe traders would continue to face tough times due to excessive news flow, causing erratic swings in markets," Mishra further added.
As per Yesha Shah, Head of Equity Research, Samco Securities, markets sentiment this week will primarily be driven by the quarterly results and the monthly expiry.
"Further, as Covid cases are rising in various Indian locations, the pace of its spread will be kept an eye on. Globally, movement in Treasury yields and dollar index coupled with developments on in the Ukraine-Russia conflict will influence market movements," said Shah.
These factors are likely to keep markets choppy, as per Shah.
RBI releases minutes of monetary policy committee’s three-day meeting .
The RBI released the minutes of the six-member monetary policy committee’s three-day meeting (April 6 to 8, 2022) on Friday.
The Governor emphasised that while the risks to domestic growth call for continued accommodative monetary policy, inflationary pressures necessitate monetary policy action.
Emkay Global in a note said, "The minutes of Apr'22 policy reaffirmed the MPC's reaction function pivot, reflecting its discomfort with inflation amid changing macro realities. The persistent inflation narrative saw coherence among members, with most believing that, irrespective of the source of inflation (supply or demand side), current high levels require a policy tilt and taming of inflation expectations."
"Even though the economic outlook is being impacted by huge global crosscurrents and shifts - the net impact of which is still hard to gauge, the RBI's rhetoric has moved in a hawkish direction. However, most members believe that, amid economic normalisation, the gradual rebalancing of liquidity and the move toward equilibrium real rates are consistent with non-inflationary growth," it said.
"Various global and domestic push-and-pull factors will challenge the RBI's approach toward liquidity normalization. Nonetheless, a huge bond supply in FY23 will require the RBI's invisible hand, implying the return of tactical OMOs, especially as the BoP deficit could soar to $50 billion in FY23. We maintain that a mild bear-flattening bias of the Gsec curve may prevail," it said.
FII selling continues
Foreign outflows continued last week with Foreign institutional investors (FIIs) having net sold shares worth ₹2,461.72 crore, while domestic institutional investors (DIIs) net purchasing shares worth ₹1,602.35 crore on April 22, as per NSE provisional data.
Technical outlook
From a technical perspective, as per Prashanth Tapse, Vice President (Research), Mehta Equities, after Friday's depressed closing, it will be difficult for investors to look forward to a sustained recovery.
"Until Nifty is unable to move above its weekly high of 17,415-mark, a ‘much more severe’ selloff looms at the markets which could take Nifty towards 17,000 and then at 16,597 mark," said Tapse.
"Nifty must defend 16,800 levels for any meaningful recovery else the tone would turn more bearish. In case of any rebound, it would face a hurdle around 17,450 and then 17,700 levels," Mishra said.