Markets edged lower in a volatile week and shed over a percent, in continuation to the prevailing consolidation phase. The tone was slightly positive in early sessions, however, pressure in global markets changed the tone as the week progressed. Consequently, the benchmark indices, Nifty and Sensex, settled closer to the week’s low at 19542.60 and 65,397.60, respectively. In line with the index, all major sectors, barring auto, closed in the red, wherein realty, metal, FMCG and banking were among the top losers. Meanwhile, a mixed trend on the broader front kept the traders occupied.

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A weak start to the earnings season, disappointment from the IT sector, and a mixed bag of results from banks influenced investors to book profits from the table.

This week, market participants will vigilantly monitor US GDP data for insights into the Federal Reserve's interest rate trajectory. Investors will also react to Q2 results of ICICI and Kotak Mahindra Bank that was announced over the weekend.

What Are The Experts Saying?

The coming week is a holiday-shortened one and volatility is expected to remain high due to the prevailing earnings season and scheduled expiry of October month derivatives contracts, said Ajit Mishra, SVP - Technical Research at Religare Broking. Besides, the tone of global indices, especially the US, would remain on participants' radar for cues, Mishra said.

Investors are likely to remain cautious in the near term due to concerns about the long implication of geopolitical tensions in the Middle East. We expect volatility to persist, although long-term investors will find bargain hunting opportunities due to an optimistic Q2 FY24 earnings estimate and a festival-driven demand environment. Additionally, as the earnings season gains momentum, investor sentiment will be shaped by corporate’s management commentary and bottom-up investment approach," said Vinod Nair of Geojit Financial Services.

Siddhartha Khemka, Head - Retail Research at Motilal Oswal expects earning season to pick up pace in a truncated week which would direct the market trend along with global cues. On global front, ECB would announce interest rate decision next week.

"Banking sector will be in focus on Monday as investors would react to Q2 results of ICICI and Kotak Bank that would be announced over the weekend. Among the key results to be announced next week would be from Axis Bank, TechM, Maruti, Bajaj Finserv, SBI Life and Dr Reddy," Khemka said.

"Global equities fell and oil and gold prices climbed as investors responded to the threat of a weekend escalation that would spread the conflict between Israel and Hamas to the wider Middle East region. The sight of US government bonds yields hitting 5% for the first time since 2007 amid an increasingly threatening conflict in the Middle East left investors searching for safety," said Deepak Jasani of HDFC Securities.

What Do The Nifty 50 Charts Indicate?

Nifty has been hovering in a range i.e. 19,300-19,850 for almost a month now and inching lower after retesting the upper band. "We feel fresh weakness in the banking majors combined with the resumption of decline on the global front could push the index lower and 19,200-19,450 would continue to act as a crucial support zone," Mishra said. Meanwhile, resilience in select heavyweights from auto, FMCG, pharma and realty majors would continue to offer buying opportunities. Traders should align their positions accordingly and prefer hedged trades.

Nifty fell on October 20 showing persistent weakness. However, it has formed a doji after a fall, suggesting possibility of a bounce. On weekly charts, it fell 1.06%. "19432-19492 band could provide support to the Nifty in the near term while 19730 could be tough to breach on upmoves," Jasani said.

The benchmark Nifty recently experienced a significant decline, falling below the 50-day moving average (50DMA). The current trend appears to be negative, with immediate support situated at 19,500. "A further decline below this level could potentially lead the index towards the range of 19,150 to 19,000," said Rupak De, Senior Technical analyst at LKP Securities..

On the upside, De said the zone between 19,600 and 19,650 is expected to act as a strong resistance. A move above 19,650 could trigger short covering in the market.

Bank Nifty

The Bank Nifty index has been locked in a persistent struggle between bullish and bearish forces, resulting in a period of consolidation that has extended for the past two days. The index is currently teetering at a crucial "make or break" point.

"The level of 43500 is regarded as decisive. A breach below the 43500 level is anticipated to trigger additional selling pressure in the market," said Kunal Shah, Senior Technical & Derivative analyst at LKP Securities.

"On the other hand, if this level manages to hold on a closing basis, it could prompt a substantial short-covering rally. The potential target for such a move is around 44500, where there is a notable accumulation of open interest on the call side," Shah said.

What Are Global Cues Indicating?

US stock futures ticked higher on Sunday night as traders looked ahead to the release of corporate earnings from tech industry behemoths. Futures tied to the Dow Jones Industrial Average surged 59 points, or 0.18%. S&P 500 futures and Nasdaq 100 futures rose 0.23% and 0.15%, respectively.

The moves follow a tough week for stocks, as concerns over higher interest rates sent all three major indexes into negative territory. The S&P 500

ended the week 2.4% lower, notching its first losing week in three. The Dow Jones Industrial Average shed 1.6%, while the Nasdaq Composite

slumped 3.2% to register its second losing week in a row.

The yield on the benchmark 10-year US Treasury climbed above the key 5% level on Thursday for the first time since July 2007. The move came after Fed's Jerome Powell signaled hawkish messaging in a speech at the Economic Club of New York.

Earnings season ramps up this week, with a slew of big tech titans slated to report. Investors will anticipate results from Alphabet, Amazon, Meta and Microsoft to provide key information for the stock market.

Here are the stocks to watch out for ahead of Monday's session:

ICICI Bank posted a 36% growth in net profit for the September quarter to Rs 10,261 crore. The net interest income or NII climbed 24% to Rs 18,308 crore.

Yes Bank witnessed a 47% on-year rise in net profit for the September quarter to Rs 225 crore.

IDBI Bank recorded a 60% YoY growth in net profit for the September quarter to Rs 1,323 crore.

Kotak Mahindra Bank has received RBI's nod to appoint Ashok Vaswani as MD and CEO for three years. The private lender posted 24% growth in net profit for the September quarter to Rs 3,191 crore.

JSW Energy recorded a net profit of 86% to Rs 850 crore in the September quarter. The company's revenue from operations came in at Rs 3,259 crore.

First Published:Oct 23, 2023 12:53 AM IST