Major drivers for the equity markets this week

Equity markets will look for directions from global trends, ongoing quarterly earnings and investment patterns of foreign institutional investors (FIIs) in a holiday-shortened week ahead and may encounter volatility amid the scheduled monthly derivatives expiry, according to analysts.

Equity markets will remain closed on Wednesday on account of 'Republic Day'.

"This week is a holiday-shortened one and it's going to be critical due to the list of events and data that are lined up.

"First, markets will react to the earnings of two index heavyweights — Reliance Industries and ICICI Bank," said Ajit Mishra, vice-president (research) of Religare Broking.

Mishra added that currently, the uncertainty around the quantum of a rate hike by the US Federal Reserve is spooking markets the world over and participants expect clarity in the scheduled FOMC (Federal Open Market Committee) meeting outcome on January 26.

"Amid all, the monthly expiry of January month derivatives contract would keep traders on their toes," he said.

In the run-up to the Budget, sector-specific expectations will further add to the choppiness, he added.

"On the earnings front, we have some big names like Axis Bank, Kotak Mahindra Bank, Maruti, Cipla, Vedanta and Larson & Toubro who will announce their results along with several others," Mishra said.

Weak global sentiments wreaked havoc in the volatile domestic market last week.

Last week, the Sensex lost 2,185.85 points or 3.57 per cent, while the Nifty slumped 638.60 points or 3.49 per cent in tandem with a sell-off in global equities amid concerns over inflation and monetary policy tightening.

"Indices witnessed a four per cent cut last week, as FPI booked profits across large-caps and select high-quality mid-caps.

"Rising oil and input prices coupled with a moderating rural economy kept investors watchful as markets turned volatile," S Ranganathan, head (research) at LKP Securities, said.

The market trend will also depend on the rupee-dollar movement and Brent crude.

"Results from heavyweight Reliance Industries and ICICI Bank over the weekend would provide market direction on Monday," said Siddhartha Khemka, head (retail research) at Motilal Oswal Financial Services Ltd.

Other companies to announce their earnings this week are Federal Bank, BHEL, Canara Bank and PNB.

"This week, the domestic market is expected to remain highly volatile with investors awaiting the outcome of the upcoming Budget announcement.

"As the recent earnings failed to excite the market, the earnings outcomes this week will be a key factor in determining investor confidence," Vinod Nair, head (research) at Geojit Financial Services, said.

Billionaire Mukesh Ambani's Reliance Industries Ltd on Friday reported its best-ever quarterly performance in October-December 2021, helped by an uptick in two 'Rs' -- refining and retail, a recent tariff hike accelerating growth at Jio and a one-off gain from the sale of US shale gas business.

The oil-to-retail-to-telecom conglomerate's consolidated net profit rose 35.6 per cent sequentially and 41.5 per cent over the year-ago period to Rs 18,549 crore in the quarter ended December 31, 2021, the firm said in a statement.

Private sector lender ICICI Bank on Saturday reported a nearly 19 per cent jump in its consolidated profit to Rs 6,536 crore for the quarter ended in December 2021, helped by higher net interest income (NII) and lower provisions.

Shrikant Chouhan, head of equity research (retail) at Kotak Securities, said: "Investors' focus will be on the upcoming Union Budget, earnings season and state elections in India."

Photograph: Arko Datta/Reuters