Market outlook: Q2 earnings, global factors to influence markets this week

In the short holiday week, the domestic stock market will be affected by the movement in corporate earnings and the flow of foreign investors, analysts say. They said that market volatility could also come into play during the planned expiration of the monthly derivatives. Trading on the stock market is only allowed for three days this week due to a long holiday on the occasion of Diwali.

“We are entering a shortened festival week where bulls have reason to celebrate Diwali at a higher level as the US market witnessed a sharp recovery in Friday’s trading session,” said Santosh Meena, head of research at Swastika Investmart Ltd.

The market will continue to watch the direction of global markets, the dollar index, US bond yields and crude oil prices, Meena added.

“On the domestic front, the expiration of October may lead to some volatility, while Q2 earnings will trigger stock-specific moves,” Meena noted.

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Ajit Mishra, VP – Research, Religare Broking Ltd said the planned expiration of monthly derivatives will keep volatility high. In addition, the earnings and performance of global markets will remain on the radar.

Investors would also keep an eye on the rupee-dollar trend, the trading activity of foreign institutional investors (FIIs) and the prices of Brent crude.

“In terms of earnings, participants will first comment on the results of index majors such as Reliance, ICICI Bank and Kotak Mahindra Bank. In addition, other prominent names such as Tata Chemicals, Dr. Reddy’s, Maruti, Vedanta and Tata Power will also release their numbers during the week. Mishra added.

On Friday, Indian stock markets closed the week higher on the back of positive gains from India Inc. Both Sensex and Nifty were up more than 2%.

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On October 21, Sensex closed at 59,307.15 with 104.25 points or 0.18%, while Nifty 50 moved up 12.35 points or 0.07% to finish at 17,576.30. Heavyweights such as Axis Bank, ICICI Bank, HUL and Kotak Bank topped their Q2 results.

On Monday, the exchanges will hold a special one-hour muhurat trading session that will mark the beginning of a new Samvat 2079 – the Hindu calendar year beginning on Diwali.

Trading during the ‘muhurat’ or auspicious hour is believed to bring prosperity and financial growth to the stakeholders.

Trading would take place in different segments such as equities, commodity derivatives, currency derivatives, equity futures and options and securities lending and borrowing (SLB) in the same time frame.

Manish Jeloka, Co-head of Products & Solutions, Sanctum Wealth, said Indian equities significantly outperformed global markets in Samvat 2078, and the outperformance is expected to continue in Samvat 2079. Investors, however, should bear in mind that a slowdown in the global economy due to tightening liquidity conditions could lead to periods of volatility like that observed in Samvat 2078, he added.

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“Samvat 2079 will probably be the same as Diwali. There will be a celebration along with a loud blast of crackers. The policies of Ukraine, the US Fed Rate, Oil, Inflation and Zero Covid will continue to fail,” Nilesh Shah, Group President and MD at Kotak Mahindra Asset Management Company, said.

Banks, capital goods and manufacturing are likely to outperform the market in Samvat 2079. Also, bottom-up technology and pharma will offer interesting opportunities in the correction, he added.

The exchanges will remain closed on October 26, on the occasion of Diwali Balipratipada.

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