Coming out of an extended Easter weekend, the market is likely to remain cautious of choppiness because the futures and options contracts are set to expire on Thursday. Traders will be watching the rollover rate, which is likely to be high considering the bullish bias strengthened by an earnings season in expected lines. The smooth conduct of the elections and the expectation of Prime Minister Narendra Modi-led government coming back to power have lessened choppiness although the inherent uncertainty makes traders cautious.
The Met department has predicted a near-normal monsoon season, which has buoyed the market. The continuing flow of funds from foreign institutional investors (FII) and the smooth progress of the US-China trade talks that have calmed the nerves in global markets will also boost the domestic markets.
Technical experts believe the bullish breakout after the weeks of sideways movement showed the overall positive intent of the market, which hit all-time highs early during the previous, three-session week. The holidays of Mahavir Jayanti on Tuesday and Good Friday shortened the week. Bombay Stock Exchange (BSE) Sensex hit a new high of 39,475 and National Stock Exchange (NSE) Nifty 11,856 on April 18, which was the last session of the week. The last session saw profit booking bringing the indices down to their weekly close of 38,137 for Sensex and 11,752 for Nifty.
There are several positive factors awaiting the market opening on Monday with banking stocks in focus after the release of the Reserve Bank of India's (RBI) Monetary Policy Committee earlier this month. Most of the panel members concurred with the view of governor Shaktikanta Das that the monetary policy should help growth and that there is room for further monetary stimulus to perk up the economy. The exceptionally good FY19 Q4 results of the HDFC Bank beating the street expectations and good results of Mukesh Ambani-led Reliance Industries Limited are expected to make ripples in the market.
Traders will be watchful of market volatility with India VIX hitting a six-month high of 23.05 before closing the last session on Thursday at 22.74. But the theme of the week is likely to be the earnings with some of the major Sensex and Nifty component companies expected to announce their results, according to reports. Some 85 companies including Maruti Suzuki, Yes Bank, Hero Motocorp, Tata Steel, Axis Bank, Bharti Infratel, Indiabulls Housing Finance, ACC, SBI Life, and HDFC Life are coming out with their quarterly results during the week.
The market expectation is for Axis Bank to register robust growth in earnings driven by lower credit cost and lower slippages. The results to be declared on April 25 are expected to show double-digit loan growth driving interest income up, according to market reports.