F&O expiry, Q2 earnings, Ukraine war among 7 factors to guide market this week

New Delhi: Domestic equity markets ended the week on a higher note, extending the gains on the back of upbeat earnings from India Inc and supportive global cues.

Both benchmark indices - BSE Sensex and Nifty50- jumped more than 2 per cent each. Midcap and smallcap indices also ended in red, whereas fear gauge index India VIX slipped below 18-levels.

On the sectoral front, buoyancy on the banking front combined with a buying in select IT, energy and FMCG majors kept the tone positive for most of the week. However, metals and media counters were disappointed.

Ajit Mishra, VP - Research, Religare Broking said that markets have managed to put on a good show so far amid the mixed global cues but the participation has been restricted.

"It’s banking which is leading from the front while others are playing a supportive role in between," he added. "We feel the market tone would remain positive however the focus should remain on stock selection and risk management."

Here are the seven key factors that will guide the markets in the truncated holiday bound festive week:

Geopolitical worries
The escalating war crisis between Russia and Ukraine is likely to keep the traders on the tenterhooks with anxiety. Also, instability in the UK, after the resignation of Liz truss may also attract more volatility at the global levels.

F&O expiry
The monthly derivative contracts for October series will expire on October 27. The scheduled monthly derivatives expiry will keep the volatility high at Dalal street.

Q2 earnings
As the India Inc earning season gains momentum, markets will react to earnings of heavyweights which were released after markets close on Friday including Reliance Industries, ICICI Bank, Kotak Mahindra Bank among others.

Dabur India, Gland Pharma, SBI Cards, Tata Chemicals, Maruti Suzuki, Vedanta, Tata Power, Dr Reddy's Labs, JSW Energy and Sona BLW are among the companies which will announce their results for September 2022 quarter next week.

Crude oil
Crude oil has crossed $90 in the international markets, which is quite concerning for the economy like India, which imports much of its energy needs. This is likely to add to the demand of the US dollar and more weakness in the domestic currency. The move in crude will be keenly tracked.

Rupee Movement
After briefly breaching the 83-levels, the rupee finally closed at 82.88 against the US dollar on Friday amid a strong greenback overseas, registering a drop of 9 paise over its previous close.

"Rupee consolidated in a narrow range but suspected intervention restricted major losses for the currency. The dollar rose against its major crosses on expectation that the Fed could continue to raise rates in the forthcoming meetings," said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

FPI flows
Amid the falling rupee, foreign portfolio investors (FPIs) have been on a selling spee lately, pulling out Rs 5,992 crore from equity markets in October so far. This increases the demand for dollars and further dents the Indian markets.

Technical Outlook
Technically, Nifty is witnessing higher highs and higher lows formation after respecting its 200-DMA. On the upside, 17725 is an immediate hurdle. Above this, we can expect a rally toward the 17900-18000 zone, said Santosh Meena, Head of Research, Swastika Investmart.

"On the downside, 17400 is an immediate and strong support level while 17300-17200 is the next demand zone. As per open interest distribution, 17500 will act as a major put base ahead of monthly expiry," he added.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)