Elections, earnings to prompt volatility in Indian equities

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Elections, earnings to prompt volatility in Indian equities

Mumbai: The general election along with fourth quarter results season is set to flare up near-term volatility in the Indian equity market, analysts say.

Other factors such as ongoing quarterly results season along with crude oil price fluctuations as well as the direction of foreign fund flows and the rupee’s movement against the US dollar are also expected to impact investors’ risk-taking appetite.

“As we are close to the election result day, volatility has touched a multi-year high and it is expected that going forward volatility will continue to rule,” said D.K. Aggarwal, Chairman and Managing Director, SMC Investments & Advisors.

According to Sahil Kapoor, Chief Market Strategist, Edelweiss Investor Research: “Equity indices have remained in a broad range with volatility expanding marginally.

“Expect some more consolidated which should pave the way for an eventual breakout to the upside. Result season is turning out to be on expected lines with no major disappointments for now.”

Currently, out of 543 Lok Sabha seats, voting has been completed in 373 during the four phases out of seven. The voting for fifth phase will be held on May 6 with the results being announced on May 23.

Besides the general elections, the ongoing results season will play an important role in determining the equity indices’ movement.

Companies like Bharti Airtel, ICICI Bank, Marico, Wockhardt, Vedanta, Titan Company, HCL Technologies, PNB Housing Finance, Voltas, Allahabad Bank, Canara Bank, Larsen & Toubro and State Bank of India are expected to announce their Q4 earning results next week.

“Apart from the election outcome, the market will take cues from the evolving global as well as domestic factors especially, the foreign flow of fund and the quarterly results of the company,” Aggarwal said.

In terms of currency, Sajal Gupta, Head Forex and Rates, Edelweiss Securities said: “Expected range for the week would be between 68.80 to 69.50.”

“The Rupee gained on back of softening crude prices and Bharti rights issue flows before closing at 69.21… Other Asian currencies were weakening during the week and rupee was an outperformer.”

Last week, rupee on a weekly basis strengthened to 69.22 per greenback.

On the technical levels, the underlying short-term trend of the National Stock Exchange’s (NSE) Nifty50 remains mildly upbeat.

“Technically, with the Nifty trading in a tight range and holding above the crucial supports of 11,550, the index remains in a mild intermediate uptrend,” said Deepak Jasani, Head of Retail Research for HDFC Securities.

“Further upsides are likely in the coming week once the immediate high of 11,856 is cleared. Crucial supports to watch for a trend reversal remain at 11,550.”