Derivatives expiry to dictate equities movements (Market Outlook)

The upcoming derivatives expiry and third quarter results - are expected to steer the Indian equities markets during the weekly trade commencing from December 28.

In addition, trends in global markets, coupled with rupee movements and stock-specific action will decide market's trajectory in the upcoming week, experts said.

"We may see some pressure ahead of the F&O (futures and options) expiry next week. Overall, we expect markets to trade in a narrow range over the next couple of weeks,"

Vaibhav Agrawal, vice president, research, Angel Broking, told IANS.

Besides, the disappointment on the outcome of winter session of parliament will be an another overhang cited Devendra Nevgi, chief executive of ZyFin Advisors.

The government's inability to get the crucial GST (Goods and Services Tax) bill passed during the winter session of parliament has weighed heavy on investors' sentiment.

"The market will now look forward to earnings in current quarter and then the budget in Feb next year as well as the reconvening of parliament," Nevgi told IANS.

The third quarter results are expected to be kicked-off from January 14.

Pankaj Sharma, head of equities for Equirus Securities elaborated that stock specific action will drive the broader indices in the upcoming week.

"For next week, we think the company specific developments would be more of a driver for broader indices versus any macro events," Sharma said.

"Of course, this is unless there are some big unexpected geo-political developments or sharp movements in global markets."

Furthermore, trends in global markets, commodity prices and rupee movements against US dollar will impact markets.

"We expect markets will be volatile with upward bias in the last week of december series," said Sandeep Sharma, equity research analyst with Hem Securities.

"The trend in global markets, commodity prices and movement of rupee against dollar will dictate the trend on bourses."

For the previous week, rupee strengthened by 19 paise at 66.21 (December 23) to a US dollar from its previous close of 66.40 (December 18) to a greenback.

Moreover, trends in foreign portfolio investors (FPIs) investments will have a major bearing on markets' trajectory, especially given the fact that they have taken out Rs.23,352 crore during the period between August-September.

In November alone, the foreign investors off-loaded stocks worth around Rs.9,000 crore.

However, data for last week showed a renewed buying interest by FPIs in the Indian equity and debt markets.

The National Securities Depository Limited (NSDL) figures showed that the FPIs were net buyers during the week ended December 24. They bought Rs.961.76 crore or $145.04 million in equity and debt markets from December 21-24.

The data with stock exchanges showed that the FPIs bought stocks worth Rs.479.89 crore in the week ended December 24.

Experts added that technical indicators showed volatile trade sessions in the upcoming week.

"Indian VIX (volatility index) is approaching lower end of the range portending to a rise in volatility in the coming week," elaborated Nitasha Shankar, vice president for research with YES Securities.

The India VIX (volatility index) has declined by more than 20 percent to 13.7, as against 17.8 on December 14 -- when it peaked ahead of the FOMC (Federal Open Market Committee) meet.

Last week, healthy macro-data supported both the bellwether indices of the Indian equity markets to gain over one percent each.

The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange (BSE), rose 319.49 points or 1.25 percent to 25,838.71 points from its previous weekly close at 25,519.22 points.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) gained during the week under review. It ended higher by 99.1 points or 1.27 percent to 7,861.05 points.

(Rohit Vaid can be contacted at rohit.v@ians.in)