Markets to track global factors in holiday-shortened week; may face volatility: Analysts

Stock markets may face volatility in a holiday-shortened week ahead amid monthly derivatives expiry, besides global factors and foreign fund trading activity would continue to dictate terms, analysts said.

Factors such as movement of global oil benchmark Brent crude and the rupee would also guide the trend in equities.

Markets would remain closed on Thursday for Ram Navami.

”While volatility may increase locally before the March Futures and Options (F&O) expiry, the position of major international banks will continue to play a significant role in the direction of the market globally.

”The market will also keep an eye on the geopolitical situation because there is still tension between Russia and Ukraine and there is also some tension developing between the US and Syria. But, the market is not paying much attention to this. Due to FIIs’ aggressive selling in recent months, the institutional flow will also be crucial,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.

Last week, the BSE benchmark fell 462.8 points or 0.79 per cent, while the Nifty slipped 155 points or 0.90 per cent. Both the benchmarks ended in the negative territory for the third week in a row.

Three major factors that contributed to the market’s volatility were the global banking crisis, the US Federal Reserve’s rate increase, and the Finance Bill amendment, Meena added.

”This week is a holiday-shortened one and we expect volatility to remain high due to the scheduled expiry of March month derivatives contracts. Besides, global cues, foreign flows and movement in crude could further add to the choppiness,” Ajit Mishra, VP – Technical Research, Religare Broking Ltd, said.

Global markets have been turbulent amid worries over turmoil in the banking sector and uncertainty about what the Federal Reserve and other central banks will do with interest rates going forward.

Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd, said this week will see further increase in volatility due to the monthly F&O expiry.

Global markets were mostly lower on Friday with traders remaining cautious as lingering concerns about the recent turmoil in the banking sector continue to hang over the markets amidst fears of economic slowdown, said Deepak Jasani, Head of Retail Research, HDFC Securities.

Markets in Asia and Europe had ended lower on Friday.

”The volatility in the market is expected to continue in the short term as the global banking system is yet to fully recover from the crisis, especially in Europe. In addition to the banking sector, IT stocks also witnessed selling on fears of muted deal wins from the BFSI segment in the western markets,” said Vinod Nair, Head of Research at Geojit Financial Services.