Investors look to positive Q3 cues

Punctuated by bouts of profit-booking after the benchmark indices scaled all-time highs, the rough first week of year at US markets, expectations over Q3 results and macroeconomic data; the domestic markets exhibited mixed performance and closed on a flat note during the week ended. NSE Nifty ended 0.1 percent lower at 21,710 points, while BSE Sensex ended 0.3 per cent lower at 72,026 points. The broader market sustained its outperformance for the second straight week. Nifty Midcap-100 gained 2.5 percent, while Nifty Smallcap-100 gained 1.9 per cent. Observers say FIIs made a strong return in last two months thanks to the sharp decline in US bond yields and declining dollar. With US Fedlikely to begin cutting interest rates in next couple of months, FIIs are likely to increase their purchases in 2024 too, particularly in the early months of 2024 in the run up to the general elections. Near-term direction of the market will be dictated by Q3 earnings season, the domestic and global macroeconomic data, global bond yields, crude oil inventories, movement of the dollar index, FII and DII investment activities, the persisting uncertainties in Red Sea, and stock-specific triggers. Analysts expect strong profit growth in industrials, autos and cement, but weak for BFSI, FMCG, IT, chemicals, and consumer services.

F&O/ SECTOR WATCH

Derivatives segment witnessed brisk trading with bouts of profit booking in stocks that have run up sharply in recent times. Stocks from real estate, media and pharma sectors were major gainers whereas, profit booking was noted in the auto, metal and IT stocks. In Nifty weekly options segment, the highest Call Open Interest is at the strikes of 21,700 and 21,800 strikes, whereas on the Put side, the highest Open Interest is at the 21,500 strike. Options data indicated that the 21,800 is expected to be an immediate resistance, while the 21,700-21,500 is the crucial support area. It is pertinent to observe that in the Nifty monthly options segment, the maximum Call Open Interest is at 22,500 strike, followed by 23,000 strike; while on the Put side, the maximum Open Interest was visible at 21,000 strike, followed by 21,500 strike. For Bank Nifty, the highest Call Open Interest is at the 48,500 strike, while the highest Put Open Interest is at the 48,000 strike. Implied Volatility (IV) for Nifty’s Call options settled at 12.22 per cent, while Put options concluded at 13.37 per cent. The India VIX, a key indicator of market volatility, concluded the week at 13.33 per cent. The Put-Call Ratio of Open Interest (PCR OI) stood at 1.55 for the week.

(The author is a

senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)