Mumbai: Global crude oil prices along with macro-economic data points, coupled with fourth quarter (Q4) earning results might induce volatility in the Indian equity markets during the coming week.
According to market observers, the last few phases of the general election and the rupee’s movement against the US dollar can also trigger volatility during the week’s trade sessions.
“The main factor at play will be the trajectory of oil prices,” said Joseph Thomas, Head Research at Emkay Wealth Management.
“This assumes greater importance due to the fact that there was a sharp fall of close to two per cent in oil prices on Friday due to the relatively higher probability of Saudi Arabia and the United Arab Emirates increasing oil supply to bridge the supply gap due to complete of elimination of Iranian oil supply.”
Apart from oil prices, India Inc’s Q4 result will be major sentiment driver at the Indian equity market.
“So far Q4 results have been in-line with expectations. Any revival in earnings and potential rate cuts by RBI will help the market to outperform in near term,” said Vinod Nair, Head Of Research at Geojit Financial Services.
Companies such as Ambuja Cements, Indian Hotels, TVS Motor Company, Kotak Mahindra Bank, Britannia Industries, Greaves Cotton, Hindustan Zinc, Tata Power Company and Hindustan Unilever are expected to announce their Q4 earning results in the coming week.
“Financial results continue to be the chief source of directional trigger for markets,” Sahil Kapoor, Chief Market Strategist, Edelweiss Professional Investor Research, told IANS.
“However for the month of May the investor attention will be on general election results. Expect indices to consolidate and then move up as earnings are beginning to improve.”
Additionally, investors will look out for upcoming macro-economic data points such as the eight core industries’ (ECI) output, the country’s fiscal deficit numbers and PMI manufacturing figures which will be released during the week starting April 29.
On the currency front, Sajal Gupta, Head Forex and Rates, Edelweiss Securities said: “We remain wary of INR positioning ahead of a domestic event risk in the form of union election outcome on May 23.”
“Importantly the ‘May seasonality’ historically has not augured well for INR, with the currency losing around two percent in the last nine years in the month of May. We expect USD/INR to range 69.50-70.30 for the week.”
The rupee on a weekly basis weakened to 70.01-02 per greenback.
On technical levels, Deepak Jasani, Head of Retail Research for HDFC Securities said that NSE Nifty remains in an intermediate uptrend.
“Technically, with the Nifty bouncing back and holding above the crucial supports of 11550, the Nifty remains in an intermediate uptrend,” Jasani said.
“Further upsides are likely in the coming week once the immediate highs of 11,856 are cleared. Crucial supports to watch for a trend reversal remain at 11,550.”