Inflation-fighting measures to set the tone for mkts


After disappointing results from major IT company Infosys and HDFC Bank, the US Fed’s hawkish statement hinting at a 50 basis point rate hike at next month’s policy meeting, the continuing woes of the Russian- Ukraine and the volatility of global crude oil prices, it was yet another week of losses for the market.

BSE Sensex corrected 1,142 points or 1.96% to close the week at 57,197, and NSE Nifty fell 304 points or 1.74% to 17,172. However, broader markets smartly beat benchmarks with the Nifty Midcap and Smallcap 100 indices posting gains of 3.6% and 2.7%. Inflation would dictate the direction of stock markets around the world.

Ahead of F&O settlement week, aside from the continued focus on the war in Ukraine, the Covid situation in China and global signals; earnings will continue to trigger strong equity-specific swings. The coming week would see results from several large caps as well as mid cap and small cap segments. Bajaj Finance, HDFC Life, Bajaj Auto, HDFC AMC, HUL, Axis Bank, Bajaj Finserv, SBI Life, Vedanta, InduSind Bank, Maruti, Ultratech Cement, Wipro, KPIT Technologies, Macrotech Developers, Aditya Birla Sun Life AMC, AU Small Finance Bank, Nippon Life India AMC, UBL, UTI AMC, Indian Hotels, Persistent Systems, Syngene, Ambuja Cements, Biocon, IndiaMart, Laurus Labs, MFSL, Mphasis, HFCL, L&T Finance Holdings, SBI Cards, Star Health, Tanla Platforms, and Tata Chemicals will release its figures next week.

Listening post: Concerns about slowing corporate earnings and plans by the US Federal Reserve to quickly raise interest rates have driven markets around the world over the past week. Of the companies that have reported so far, only around 80% have exceeded analysts’ expectations. Negative IT reports and input pressure over the next two quarters, seen in all areas – from automobiles to FMCGs, consumer durables or even pharmaceuticals, have mitigated the feeling.

Over the past week, Fed Chairman Jerome Powell has made it clear to investors that the central bank is ready to tighten monetary policy more quickly and indicated that it will likely raise interest rates by a half a percentage point at its May meeting. In India, an interest rate hike is also expected in June. The market is finally internalizing and pricing in that central banks around the world really mean what they say and they won’t back down. Someone had a saying, and it’s pretty good: “You don’t fight the RBI when the RBI fights inflation.” It’s a delicate tightrope that central bank policymakers have to walk right now. They need to put a lid on this inflation pot, but they don’t want the steam to be completely driven out of the economy. Many traders now fear that the RBI’s tightening cycle could tip the economy into a slowdown


Mirroring the action in the spot market, the derivatives segment continued to see strong volumes. On the options front, maximum call open interest (OI) was seen at 18,000 strikes followed by 17,500 and 17,400 strikes, with a call write at 18,000, 17,400. witnessed 17,000 keystrokes followed by 16,000 and 16,500 keystrokes, with Put written at 17,000 keystrokes. Going forward, the 17,200 level should be crucial for the Nifty to see a recovery towards the 17,600 VWAP (Volume Weighted Average Price) levels. The Nifty VIX for the week closed at 17, 85% The OI PCR for the week closed 0.94 lower than the previous week, indicating more call writes than sell writes. Expect Nifty to trade in the range of 16800-17400 levels while Bank Nifty might navigate in the area of ​​the 35200 – 36900 range. the trend becomes clear. You have to be selective about the stock-centric approach and follow strict stop losses for momentum bets. ICICI Bank’s weekend results beat expectations and could provide a boost to the beleaguered sector.

In the latter part of the week ahead, auto stocks led by Tata Motors, Maruti Suzuki, Hero Motocorp, TVS Motor Company, Escorts, Eicher Motors and M&M could be in focus ahead of monthly sales numbers. Reliance’s decision to recall the $3.4 billion future assets agreement after secured creditors voted against the plan is viewed positively by investors. Coupled with this move and the hopes of a strong performance boost with higher GRMs, the share price is poised to cross the Rs 3000 mark. Keep an eye on PSU stocks for steady gains during these uncertain times. Equity futures that look weak are AU Bank, Hindalco, HDFC Bank, STAR, MFSL, Polycab and UBL.

(The author is a stock market expert. He is the former vice chairman of the AP planning board)


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